Shell 3Q Earnings Drop

Royal Dutch Shell’s third quarter 2013 earnings, on a current cost of supplies (CCS) basis, were $4.2 billion compared with $6.2 billion in the same quarter a year ago.

Third quarter 2013 CCS earnings excluding identified items were $4.5 billion compared with $6.6 billion in the third quarter of 2012.

Compared with the third quarter 2012, CCS earnings excluding identified items were impacted by significantly weaker industry refining conditions, increased Upstream operating expenses and exploration expenses, as well as production volume impacts from maintenance and asset replacement activities. Earnings also reflected the impact of the challenging operating environment in Nigeria and lower dividends from an LNG venture. This was partly offset by higher contributions from Chemicals and increased underlying Upstream production volumes, led by Integrated Gas.

Basic CCS earnings per share excluding identified items decreased by 32% versus the third quarter 2012.

Cash flow from operating activities for the third quarter 2013 was $10.4 billion, compared with $9.5 billion in the same quarter last year. Excluding working capital movements, cash flow from operating activities for the third quarter 2013 was $9.9 billion, compared with $11.7 billion in the third quarter 2012.

Capital investment for the third quarter 2013 was $9.7 billion. Net capital investment for the quarter was $9.4 billion.

Total dividends distributed in the quarter were $2.8 billion, of which $1.2 billion were settled under the Scrip Dividend Programme. During the third quarter some 45.5 million shares were bought back for cancellation for a consideration of $1.5 billion. Gearing at the end of the third quarter 2013 was 11.2%. A third quarter 2013 dividend has been announced of $0.45 per ordinary share and $0.90 per American Depositary Share (“ADS”), an increase of 5% compared with the third quarter 2012.

Peter Voser, CEO said: “Our cash flow pays for Shell’s dividends and investment in new projects to ensure affordable and reliable energy supplies for our customers, and to add value for our shareholders. We are facing headwinds from weak industry refining margins, and the security situation in Nigeria, which continue to erode the near term outlook. Shell has a strong project flow in place for 2014 and beyond. We have started up a series of new oil and gas fields in the last few months, in deep water, integrated gas, and in our longer-term plays such as Iraq. These new fields are part of a project flow that will drive Shell’s cash flow in 2014 and beyond, coming alongside a reduction in net spending next year as we work through a series of acquisitions, and increase the pace of asset sales.

The company is rich with new investment opportunities – in the next few quarters Shell’s capital discipline means we will need to make hard choices between the best new investment opportunities from this industry-leading portfolio.”

Voser concluded: “Shell’s sustained investment in new growth projects will drive our financial performance. Dividends are Shell’s main route for returning cash to shareholders. We have distributed more than $11 billion of dividends in the last 12 months. So far this year, we have repurchased more than $4 billion of shares, and we are on track for up to $5 billion of share buybacks in 2013. This underlines our commitment to shareholder returns.”

[mappress]
October 31, 2013