Shell Results Kick Off Weak Quarter for Oil Majors
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% 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% 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% rise in second-quarter adjusted net profit, due to higher output from Libya and Brazil, beating forecasts.
"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.
