Royal Dutch Shell reported an 18% rise in third-quarter profit yesterday, lowering next year’s capital spending to the bottom of the expected range as it grapples with persistently low oil prices and weak refining margins.
The Anglo-Dutch oil major, whose acquisition of BG Group transformed it into the world’s top liquefied natural gas producer, has been under pressure from shareholders to cut annual spending to ensure it can maintain its dividend given the slow recovery in the oil prices.
“Lower oil prices continue to be a significant challenge across the business, and the outlook remains uncertain,” Chief Executive Officer Ben van Beurden said in a statement.
Shell’s “A” shares were up 3.4% shortly after the opening of trade in London. Shell said its 2017 capital spending was expected to be at around $25bn, at the bottom of the range previously given.
This year’s capex will be around $29bn, down from a combined $36bn for Shell and BG Group in 2015.
Net income in the quarter, based on a current cost of supplies (CCS) and excluding exceptional items, rose to $2.8bn, beating analysts’ expectations of $1.71bn.
Shell disappointed the market with its second-quarter results, the first full quarter following the completion of the BG acquisition in February, by missing expectations by around 50%.
Shell’s Integrated Gas division generated $931mn in profits, slightly above last year’s level, while oil and gas production division, known as upstream, was virtually flat.
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