Shell results kick off weak quarter for oil majors

by **hlk** Thu 26 Jul 2012, 17:30

LONDON: Weaker prices for oil worldwide and for gas in North America
took their toll on Royal Dutch Shell's profit in the second quarter.
Shell, the second largest of the western world oil "majors" behind Exxon Mobil
which reports results later on Thursday, said earnings fell to around
$6.0 billion from $8.0 billion a year ago on a current cost of supply
basis.
Adjusted for special items, the result was lower still,
at $5.7 billion down from $6.6 billion. The result undershot analysts'
predictions of around $6.3 billion.
Oriel Securities analyst
Richard Griffiths said the miss was primarily due to higher maintenance
costs and the associated outage of high-value barrels in the U.S. Gulf.
Like
its rivals, Shell is battling resource nationalism and competition from
Asian rivals to keep growth going, and has to keep one eye on a
volatile oil price.
Last week it lost out to much smaller
state-owned Thai company PTT in its attempt to add gas reserves for
future liquefied natural gas (LNG) production, pulling out of a
potential auction for Cove Energy to avoid overpaying. Some 72 percent
of Cove shareholders had accepted PTT's offer by Thursday.
"Our industry continues to see significant energy price volatility as a result of economic and political developments," said Chief Executive Peter Voser. Shell is implementing a long-term, consistent strategy against this volatile backdrop."
Shell's
smaller European rival Statoil also missed market forecasts with its
second-quarter figures, although it managed to increase profit.
British gas and oil firm BG Group
reported a 4 percent fall in quarterly profit and downgraded its 2012
production forecasts, due to difficulties in the North Sea and its
reduced activity in the U.S. shale gas market.
But Spain's
Repsol posted a 27 percent rise in second-quarter adjusted net profit,
due to higher output from Libya and Brazil, beating forecasts. Shell
shares fell 2.3 percent to 1035 pence in early trading but traders said
the weaker-than-expected result should not be too badly received by
investors.
"We still see value in RDS that has the unique ability to be well-positioned in an industry where margins are decreasing," said Atif Latif, director of Guardian Stockbrokers. - Reuters