Shell profit falls 67 percent in 2Q

[July 30, 2009]  AMSTERDAM (AP) -- Royal Dutch Shell PLC said Thursday its net profit fell 67 percent in the second quarter to $3.82 billion, reflecting a sharp decline in oil prices and worse refining margins.

In the same period a year earlier, Shell had profit of $11.6 billion. Sales at Europe's largest oil company were $63.9 billion, down from $131.4 billion.

"Energy demand is weak," said Chief Executive Peter Voser in a statement. "There is excess capacity in the market and industry costs remain high."

He added the company is "not banking on a quick recovery" in the global economy.

At Shell's exploration and production arm, earnings fell 77 percent to $1.33 billion. Production was down 6 percent to 2.9 million barrels of oil and equivalents per day, while prices realized by the company were $52.62 per barrel, from $111.92 a year ago.

"The industry outlook remains a challenging one, despite the rally in oil prices" from their winter lows, Voser said. In the first quarter of 2009, the company's average selling price was $42.16 per barrel.

At Shell's refining arm, earnings were down 74 percent to $1.16 billion, due mostly to the lower value of inventories. Stripping out the impact of price changes in both years, the arm would have posted a loss of $255 million, versus profit of $1.08 billion, due to lower refinery intake, worse margins, and higher pension charges.

Shell said it would reduce capital spending in 2010 to $28 billion, from an expected $31 billion in the current year. It said it would keep its dividend per share at $0.42, an increase of 5 percent from a year ago and the same as in the first quarter of 2009.

[Associated Press]

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