Shell profits jumps 50 pct on strong refining
Royal Dutch Shell on Nov. 2 reported a near 50 percent rise in quarterly profits, driven by strong refining, while solid cash generation underscored the oil and gas company has adapted well to a world of low oil prices.
The Anglo-Dutch company sharply boosted its cash generation in recent quarters as the effects of cost cuts and asset sales kicked in following Chief Executive Officer Ben van Beurden’s preparations for “longer forever” oil prices following the 2014 downturn.
“Shell’s three businesses all made resilient contributions to this strong set of results,” van Beurden said in a statement, referring to downstream operations, oil and gas.
Shell and most of its rivals are now able to generate profit even if oil prices return to about $50 a barrel and are once again focusing on growing their businesses. Oil prices averaged $52 a barrel in the quarter and are today above $60 a barrel.
BP said this week it was able to balance its books so far this year at $49 a barrel.
In a sign of a renewed emphasis on growth, last week Shell won half the blocks awarded in Brazil’s deepwater oil auction, where rivals BP and Exxon Mobil Corp also acquired blocks in a historic opening to foreign operators.
Shell’s third-quarter earnings rose mostly due to a tripling of profits from the refining segment which benefited from a sharp rise in profit margins in the wake of Hurricane Harvey in late August which knocked out a quarter of the United States’ refining capacity.
Shell’s chemicals segment, a key engine for its growth into the next decade, also saw profits rise by 20 percent from a year earlier.
“The numbers were strong. The downstream was the key driver again,” said Iain Reid, analyst at Macquarie.