Royal Dutch Shell added to the mood of optimism in the oil industry on Thursday by announcing a better than expected 47 per cent increase in third-quarter profits.
The results mirrored strong results from BP earlier in the week and showed how the combination of rising oil prices and falling costs is repairing balance sheets across the sector after a brutal three-year downturn.
The Anglo-Dutch group earned $4.1bn in the three months to September 30 on a current cost of supplies basis, the measure tracked most closely by analysts. This compared with $2.8bn in the same period last year and beat analysts’ consensus forecast for $3.6bn.
Brent crude, the international benchmark, averaged $52 per barrel during the quarter — about 13 per cent higher than a year ago — and has since rallied above $60 per barrel for the first time since 2015.
Deep cost cuts and asset sales — including the completion this week of $4.4bn of disposals in the UK North Sea and Gabon — have further eased the financial strain which Shell has been under since its $50bn acquisition of BG Group last year.
Net debt ended the quarter at $67.7bn, down 13 per cent from $77.9bn a year ago. This helped keep the dividend steady at 47 cents a share.
Cash flow from operations, excluding working capital, was $10.1bn, compared with $7.8bn in the same period last year, showing how Shell, like other large oil and gas groups, has adjusted its cost bases to make money at current oil prices after a wrenching period of adaptation since the crash from above $100 per barrel in 2014.
Source: www.ft.com
