London: Royal Dutch Shell Plc, Europe's largest oil company, posted a 15 per cent increase in second-quarter profit on higher oil prices and production as it exceeded a target for cost savings.
Net income rose to $4.39 billion (Dh16.12 billion) from $3.82 billion a year earlier, The Hague-based Shell said yesterday in a statement. Excluding one-time items and inventory changes, earnings beat analyst estimates.
Peter Voser, in his second year as chief executive officer, expects to accelerate asset sales of as much as $8 billion by the end of next year. Cost savings of $3.5 billion beat an earlier target by about 15 per cent and were completed early, resulting in 7,000 job reductions 18 months ahead of schedule.
"Overall, it's a reasonable performance," Jason Kenney, an Edinburgh-based analyst at ING Wholesale Banking, said by phone.
The results follow a record loss for BP after Shell's close rival set aside about $30 billion earlier this week to pay for clean-up costs and liabilities arising from the Macondo well disaster. ExxonMobil Corp., the largest US oil company, was scheduled to report results later yesterday.
Excluding one-time items and inventory changes, Shell's earnings were $4.21 billion. That beat the $4.08 billion median estimate of 14 analysts surveyed by Bloomberg. Production rose 5 per cent to 3.11 million barrels of oil equivalent a day.
Mixed signals
Voser cautioned that the outlook for earnings and cashflow remain uncertain due to "mixed signals" in the global economy.
"Oil prices have remained firm so far this year, but refining margins, oil products demand and natural gas spot prices all remain under pressure," he said in the statement.
Shell's Class A shares traded in London rose 0.3 per cent to 1,793 pence as of 8.04am. The stock is down 4.8 per cent this year, compared with a 33 per cent decline for BP, which at one point lost more than half its market value on concerns over the mounting cost of containing the leak.
Voser is targeting hard-to-reach rock formations in Australia, China and the US as well as projects in Qatar, to boost production growth. As much as 40 per cent of the company's capital spending in the next few years has been earmarked for the Asia Pacific region.
Goals met
This year has already seen startups in the Gulf of Mexico and Brazil with Perdido and the BC-10 project, while the Sakhalin project in Russia has beaten production goals.
Producers including Shell face higher costs following a US clampdown on offshore drilling arising from the oil spill. Shell has the most rigs affected by the ban.
Shell is still seeking to dispose of 15 per cent of its refining capacity and is selling retail assets in Africa and Latin America, putting a total of 35 per cent of its current retail markets under review.
Voser is assessing more than 35 projects that may add 8 billion barrels of oil equivalent resources, boosting production until 2020.
Shell, which has been adding more gas than oil to its resources since 2005, expects the share of gas as a proportion of total output to rise to 52 per cent in 2012.
Shell's output at the Athabasca oil sand project in Canada was reduced because of maintenance works after being shut in mid-March.
