Friday July 30, 2010
Shell profits double on revamp
LONDON: Royal Dutch Shell Plc said second-quarter current cost of supply (CCS) net income jumped 94% to US$4.53bil, thanks to a strong operating environment and a speedy restructuring of the group.
Europe’s largest oil company by market value said it had cut US$3.5bil in costs and 7,000 jobs, exceeding earlier targets, and allowing it to wrap up its overhaul six months quicker than planned.
The Netherlands-based company added that it would boost asset sales, echoing a strategy announced earlier this week by rival BP.
BP’s main aim is to pay costs related to its oil spill in the Gulf of Mexico but it also wants to try to upgrade its portfolio of fields and offer better growth.
Shell’s year-on-year profit growth was flattered by some big non-cash charges in the second quarter of 2009.
Excluding such non-operating items, the result grew 34% to US$4.21bil, beating an average forecast of US$3.99bil from a Reuters poll of 10 analysts.
London-based BP’s underlying result rose 77% while ConocoPhillips, the third-largest oil company in the United States, said underlying profit rose 150%.
CCS net income strips out non-cash gains or losses related to changes in the value of fuel inventories, and, as such, is comparable to net income under US accounting rules.
In a sign that Shell is getting to grips with a 7-year decline in oil and gas production, the company said output rose 5% compared with the same period in 2009, to average 3.11 million barrels of oil equivalent per day (boepd) in the quarter – the second consecutive quarter of strong growth.
However, the portfolio is becoming increasingly focused on gas, which traditionally has offered weaker returns than crude. — Reuters
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