Net profit at Royal Dutch Shell increased more than seven-fold in the first quarter as oil prices recovered from heavy declines, the energy giant said on Thursday (May 4). Profit after tax came in at US$3.538 billion (€3.240 billion) in the three months to March, compared with US$484 million in the first quarter of 2016, the Anglo-Dutch group said in a statement.
Royal Dutch Shell chief executive Ben van Beurden said the group had “benefited from improved operational performance and better market conditions”. Energy producers across the world are reaping the benefits of higher oil prices, which have strongly increased their revenues and profits.
Crude futures have recovered thanks to the OPEC oil producers’ cartel adhering to an output cut agreed late last year. US energy giants ExxonMobil and Chevron, as well as French titan Total and British group BP have all posted bumper profits in the past week.
Oil prices are trading around US$50 a barrel, up from US$30 at the start of 2016. The hike helped Shell to a revenue increase of 47 per cent to US$73.3 billion in the first quarter from a year ago.
Shell on Thursday added that first-quarter profit adjusted for exceptional items and the changing value of oil and gas inventories more than quadrupled to US$3.38 billion.
“The first quarter 2017 was a strong quarter for Shell,” added van Beurden, who said the company was helped also by reduced debt.
Shell last year bought smaller British rival BG in a deal worth around US$68 billion at the time to strengthen the Anglo-Dutch group’s position in the liquefied natural gas (LNG) market.
“Following the successful integration of BG, we are rapidly transforming Shell through the consistent and disciplined execution of our strategy,” van Beurden said on Thursday.
“This includes investing around US$25 billion this year and the delivery of new projects, which we expect to generate US$10 billion in cash flow from operating activities by 2018.” Royal Dutch Shell shares rose 2.4 per cent in morning trades on the London stock exchange.
The group’s latest earnings on “renewed stability in oil prices … appear to justify the somewhat risky decision by Shell management to pay such a big price for BG Group and its LNG assets”, noted Michael Hewson, analyst at CMC Markets UK.
“In seeking to mitigate the cost of this, the company embarked on a US$30-billion cost-cutting programme which it is making good progress on.”
This article was originally published on Channel News Asia
