Shell records third-quarter earnings of $1.4 billion

Royal Dutch Shell PLC posted third-quarter current cost of supplies (CCS) earnings of $1.4 billion, up from a loss of $6.1 billion for the same quarter a year ago.

Third-quarter CCS earnings excluding identified items were $2.8 billion, up from $2.4 billion for third-quarter 2015 due to increased production volumes mainly from BG PLC assets, lower operating expenses more than offsetting the increase related to the consolidation of BG, and lower well write-offs, Shell says.

Those benefits were partly offset by the decline in oil, natural gas, and LNG prices, and increased depreciation mainly resulting from the BG acquisition, and weaker refining industry conditions.

Capital investment for the quarter was $7.7 billion, and for the year’s first 9 months was $73 billion, including $52.9 billion related to the acquisition of BG. Organic capital investment for the full year is expected to be $29 billion, including $3 billion in noncash items, some $18 billion below 2014 Shell and BG levels.

Capital investment in 2017 is expected to be about $25 billion, which is at the low end of the company’s $25-30 billion range.

Companywide oil and gas production for the quarter was 3.595 million boe/d, an increase of 25% compared with third-quarter 2015. The impact of BG on production was an increase of 806,000 boe/d. LNG liquefaction volumes of 7.7 million, of which BG contributed 2.19 million tonnes, were 45% higher than for the same quarter a year ago.

Integrated gas, upstream earnings up

Earnings from Shell’s integrated gas segment excluding identified items were $931 million compared with $918 million a year ago. Shell says the increase reflects higher LNG and liquids production volumes related to the contribution of BG assets and improved operational performance despite lower feed gas availability as a result of security impacts in Nigeria, and lower well write-offs.

Third-quarter integrated gas production was 912,000 boe/d compared with 661,000 boe/d a year ago. Liquids production increased 5% and gas production increased 54% compared with third-quarter 2015.

Upstream earnings excluding identified items were $4 million compared with a loss of $582 million a year ago, benefitting from increased production volumes mainly from BG assets and lower taxation.

Third-quarter production was 2.683 million boe/d compared with 2.219 million boe/d a year ago. Liquids production increased 25% and natural gas production increased 15% compared with third-quarter 2015 driven by the impact of BG.

New field start-ups and the continuing ramp-up of existing fields—particularly Corrib gas field in Ireland, Erha North ph2 in Nigeria, Sabah Gas Kebabangan in Malaysia, and Stones in the US—contributed some 51,000 boe/d to production compared with third-quarter 2015.

Downstream earnings excluding identified items were $2.078 billion compared with $2.617 billion for the year-ago quarter, mainly impacted by weaker refining industry conditions, and lower trading margins.

Refining and trading earnings excluding identified items were $271 million in the third quarter compared with $1.044 billion for the same period last year. Earnings were impacted by lower realized refining margins, reflecting the weaker global refining industry conditions due to oversupply, and lower trading margins.

Chemicals earnings excluding identified items were $542 million in the third quarter compared with $532 million a year earlier. The increase is attributed to lower operating expenses, and stronger base chemicals industry conditions driven by tight supply in the US and Asia and improved operating performance in Europe, the company says.

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