Shell profit surges on oil price rebound

LONDON: Royal Dutch Shell reported a sharp rise in net profit yesterday, beating forecasts and joining its peers as stronger oil prices and improved refining margins boosted revenue after three years of downturn.

A billion dollars in cost savings and budget cuts made over the past three years, as well as around US$20 billion (RM86.6 billion) of asset sales following the US$54 billion acquisition of BG Group in February, also helped increase cash flow and boost profit.

After completing the integration of BG Group in the third quarter of last year, the company and investors are turning their focus to increasing revenue and reducing debt as oil prices appear to recover.

A near 55 per cent rise in oil prices in the first quarter compared with a year earlier to around US$54 a barrel was the main driver of earnings growth.

Shell generated a cash flow of US$9.5 billion in the quarter, up 13-fold from a year earlier, enabling it to cover its dividend and reduce debt for a third quarter in a row.

Oil and gas production rose 2 per cent in the quarter to 3.752 million barrels of oil equivalent (boed) from 3.905 million boed in the fourth quarter of last year, as a number of new fields continued to ramp up production.

Refining and marketing earnings also rose 20 per cent, to US$2.49 billion.

Shell’s debt ratio versus company capitalisation declined in the first quarter to 27.2 per cent from 28 per cent in the fourth quarter.

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 analysts’ consensus of US$3.05 billion. Reuters