Royal Dutch Shell has reported a sharp rise in its first quarter profit, boosted by chemicals and upstream segment of its business.
Current Cost of Supplies (CCS) Income excluding identified items was $3,86 billion, up from $1,6 billion a year ago.
The $2.2 billion increase from the first quarter of 2016 was mainly driven by higher contributions from Upstream and Chemicals, partly offset by higher net interest expense, Shell said.
Royal Dutch Shell Chief Executive Officer Ben van Beurden said: “The first quarter 2017 was a strong quarter for Shell. Cash flow from operating activities of $9.5 billion and free cash flow of $5.2 billion enabled us to reduce debt, and cover our cash dividend for the third consecutive quarter. We saw notable improvements in Upstream and Chemicals, which benefited from improved operational performance and better market conditions. Our operations in Qatar are restarting during the second quarter.
“We continue to reshape Shell’s portfolio and to transform the company with over $20 billion divestments completed or announced that will strengthen the balance sheet as they are completed.”
“The strategy we have outlined to deliver a world-class investment case is taking shape. Following the successful integration of BG, we are rapidly transforming Shell through the consistent and disciplined execution of our strategy. This includes investing around $25 billion this year and the delivery of new projects, which we expect to generate $10 billion in cash flow from operating activities by 2018.”
On the Upstream side, during the quarter, Shell made a final investment decision (“FID”) for the Kaikias deep-water project in the Gulf of Mexico. Shell announced the sale of a package of United Kingdom North Sea assets, oil sands and in-situ interests in Canada, and onshore interests in Gabon.
Upstream earnings excluding identified items were $540 million, compared to a loss of $1.4 billion a year ago.
Compared with the first quarter 2016, Upstream earnings excluding identified items benefited from higher realised oil and gas prices, increased production volumes mainly from new assets and improved operational performance, and lower depreciation including the impact of assets held for sale.
Compared with the same quarter a year ago, cash flow from operating activities increased as a result of higher prices and volumes. The production contribution of BG assets for an additional month, compared with the first quarter 2016, was some 211 thousand boe/d, Shell said..
New field start-ups and the continuing ramp-up of existing fields, in particular Lula Central, Lula Alto and Lapa in Brazil, Kashagan in Kazakhstan, Sabah Gas Kebabangan in Malaysia, and Stones in the Gulf of Mexico, contributed some 142 thousand boe/d to production compared with the first quarter 2016, which more than offset the impact of field declines, Shell said.
Looking ahead, Shell said that compared with the second quarter 2016, Upstream earnings are expected to be negatively impacted by a reduction of some 45 thousand boe/d associated with completed divestments, and by some 50 thousand boe/d associated with the impact of lower production at NAM in the Netherlands. Earnings are expected to be positively impacted by some 55 thousand boe/d associated with lower levels of maintenance.
Offshore Energy Today Staff