SHELL Transport shares climbed 4p to 454p yesterday on relief that there were no unpleasant surprises in its first-quarter figures.
Net income fell by 23% to $1945m (#1171m) as a result of lower oil prices but this was better than analysts had predicted and was in line with BP's recent performance.
There had been fears that the group's heavy involvement in Asian markets would hit the results harder. Shell has disappointed the market in recent quarters, when it had been hoped that its cost-cutting and efficiency drive would be yielding benefits.
There are now hopes that the relatively strong showing in the first quarter reflects these benefits starting to show through. With Shell now pursuing shareholder value with more vigour, the shares are on many brokers' long-term buy lists despite the difficult trading climate.
Exploration and production earnings collapsed by 45%, with North America the worst hit. Oil prices were down by a third on a year ago and the group noted that after touching a low of $11.90 barrel they have stabilised at between $13 and $14 following a producer agreement to constrain output. Gas prices were flat.
''The outlook for crude prices will be dependent on successful implementation of agreed production cuts,'' the group stated.
Shell's crude production outside North America was up 2% with increases in UK, Syria and Venezuela. Gas sales were down 13%, partly due to the mild winter. In America, oil and gas output was higher but prices were depressed.
In oil products, earnings were 1% higher at $597m. There was strong demand growth in the US and Europe and Asia-Pacific volumes were maintained despite the economic problems. But margins there were down some 43%. Shell believes there could be some recovery in margins in the second quarter as previous destocking reverses.
Refining margins generally were lower due to planned refinery shutdowns. Marketing earnings improved on the back of better margins.
Chemicals' earnings advanced 19% to #290m owing to one-off factors. Margins were lower as petrochemical prices have been weak owing to the Asia-Pacific situation.
Shell is making better use of its strong balance sheet. Higher capital expenditure and long-term investments have cut cash holdings to $5100m, about 35% of the level of a year ago.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article