Shell's profit soars as oil sector rebounds

Shell's first-quarter profit, adjusted for one-time items and inventory changes, more than doubled to US$3.75 billion (S$5.2 billion) from US$1.55 billion a year earlier.
Shell's first-quarter profit, adjusted for one-time items and inventory changes, more than doubled to US$3.75 billion (S$5.2 billion) from US$1.55 billion a year earlier.PHOTO: REUTERS

LONDON • Royal Dutch Shell said net profit more than doubled in the first quarter, joining its peers in beating analysts' forecasts as rebounding oil prices and refining margins lifted revenue after a near three-year downturn.

A 55 per cent rise in oil prices from a year ago and deep cost cuts boosted cash generation, enabling the Anglo-Dutch company to cover spending and dividend payouts, while reducing debt following its US$54 billion (S$75.5 billion) acquisition of BG Group last year.

Shell remains on track to hit its US$30 billion asset disposal programme by next year to finance the BG acquisition, selling around US$20 billion since last year, including a large portfolio in the North Sea and exiting Canada's oil sands.

"This is now the third consecutive quarter of dividend coverage which, coupled with the divestments to be cashed in later in the year, suggests Shell is shaping up to have a much better performance this year," RBC Capital Markets analyst Biraj Borkhataria said in a note after the results yesterday.

Europe's largest oil and gas company joined rivals BP, ExxonMobil, Chevron and Total in beating analysts' quarterly profit forecasts.

Its profit, adjusted for one-time items and inventory changes, more than doubled to US$3.75 billion from US$1.55 billion a year earlier, surpassing the US$3.01 billion average of analyst estimates.

Net income attributable to shareholders in the quarter, based on a current cost of supplies and excluding exceptional items, rose 142 per cent to US$3.75 billion, compared with a company-provided analysts' consensus of US$3.05 billion.

Shell's shares rose 2.6 per cent when the market opened, outperforming a 0.5 per cent gain in London's FTSE 100 index .

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 05, 2017, with the headline 'Shell's profit soars as oil sector rebounds'. Print Edition | Subscribe