Oil giant Shell saw its 3Q current cost of supply (CCS) profit soar to $4 billion, up from $1.37 billion a year ago, boosted by higher contributions from Downstream, Upstream and Integrated Gas businesses.
According to Shell, earnings benefited mainly from stronger refining and chemicals industry conditions, increased realized oil and gas prices and higher production from new fields, offsetting the impact of field declines and divestments.
Cash flow from operating activities for the third quarter 2017 of $7.6 billion included negative working capital movements of $2.5 billion, mainly due to increases in inventory value and current receivables, compared with favorable working capital movements of $0.7 billion in the third quarter 2016. Excluding working capital effects, cash flow from operations was $10.1 billion, Shell said.
Royal Dutch Shell Chief Executive Officer Ben van Beurden said: “Shell’s three businesses all made resilient contributions to this strong set of results. Upstream generated almost half of the $10 billion cash flow from operations excluding working capital this quarter, at an average Brent oil price of $52 per barrel, and this was complemented by good cash contributions from our growing Integrated Gas business and from Downstream. This competitive performance is further evidence of Shell’s growing momentum, and strengthens my firm belief that our strategy is working.”
During the quarter, The Shell Petroleum Development Company of Nigeria Ltd joint venture announced first production of Phase 2 of the Gbaran-Ubie integrated oil and gas development. Peak production of around 175 thousand boe/d is expected in 2019 (Shell interest 30%).
Upstream divestments completed during the quarter totalled some $187 million, which included the sale of approximately 5,300 non-core acres and associated producing assets in the East Haley area of the Permian Delaware Basin in the USA.
In October, Shell and its partners won 35-year production-sharing contracts for three pre-salt blocks in the Santos Basin, offshore Brazil. Two blocks are adjacent areas to Gato do Mato and Sapinhoá, where Shell is already present, and the third new block is Alto Cabo Frio West. In November, Shell completed the divestments of its onshore assets in Gabon and the package of UK North Sea assets.
Providing the outlook for the fourth quarter, Shell said that Compared with the fourth quarter 2016, Integrated Gas production volumes are expected to be positively impacted by some 90 thousand boe/d, mainly associated with Gorgon in Australia and portfolio impacts.
Compared with the fourth quarter 2016, Upstream earnings are expected to be negatively impacted by a reduction of some 250 thousand boe/d associated with completed divestments, as well as some 40 thousand boe/d associated with higher maintenance activities.
Offshore Energy Today Staff