Shell profits almost halved

By THIS IS MONEY
Updated:

 

PROFITS nearly halved at energy giant Shell in the first quarter, but the performance was much stronger than the market had expected. Earnings fell 48% to $1.99bn (£1.42bn) in the three months to 31 March, around £100m more than City forecasts. The shares climbed 16 1/2p to 497p by late morning.

The Anglo-Dutch company, which has been the laggard of the giant oil trio in terms of investor confidence this year, blamed weaker oil prices and tough fuel refining conditions for the drop.

Exxon-Mobil reported a year-on-year earnings decline of 58% last week and BP a fall of 57% this week. Both have heavier exposure than Shell to the US, where downstream profit margin declines have been biggest.

Chairman Phil Watts said Shell was set to hit its 3% target for growth in oil and gas production. 'We have made good progress developing our businesses; we have continued to deliver robust profitability; and we are on track to meet our targets,' he added. Shell cut its target from 5% to 3% last year due to difficulties accessing reserves in Opec states.

Oil prices for the quarter averaged $21.15 a barrel, from $25.80 a year earlier. Refining margins fell to just $0.05 a barrel from £$2.20 a year earlier, while US natural gas prices had tumbled 64%.

'The outlook for oil prices is dependent on the speed of economic recovery in the USA and on developments in the Middle East,' Shell added.

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