Europe’s largest oil company Royal Dutch Shell plc (RDS-A – Free Report) reported strong second-quarter results, as its upstream business swung to a profit on rebounding oil prices and refining operations remained robust amid successful cost containment efforts.
Shell is the first integrated supermajor to come out with second quarter results. Continental rival BP plc (BP – Free Report) is scheduled to report numbers next week, while U.S.-based Chevron Corp. (CVX – Free Report) and ExxonMobil Corp. (XOM – Free Report) will release June-quarter earnings tomorrow.
The Hague-based Shell reported earnings per ADS (on a current cost of supplies basis, excluding items) of 88 cents, breezing past the Zacks Consensus Estimate of 75 cents and the year-ago adjusted profit of 26 cents.
Revenues of $72,702 million were 21% above the second-quarter 2016 sales of $60,271 million. Meanwhile, operating expenses fell in the quarter, coming in at $9,548 million, compared to $11,546 million in the second quarter of 2016.
Royal Dutch Shell PLC Price, Consensus and EPS Surprise
Royal Dutch Shell PLC Price, Consensus and EPS Surprise | Royal Dutch Shell PLC Quote
Segmental Performance
Upstream: Upstream segment recorded a profit of $339 million (excluding items) during the quarter, turning around from the $1,325 million (adjusted) loss in the year-ago period.
This primarily reflects the impact of a rise in production on the back of assets ramping up, higher oil and gas realizations, reduced depreciation charges and better operational performance.
Shell’s upstream volumes averaged 2,672 thousand oil-equivalent barrels per day (MBOE/d), 2% higher than the year-ago period. While crude oil production increased 7%, natural gas output was down 5% – thanks to production from new fields. Liquids contributed approximately 61% to Shell’s total volumes, while natural gas accounted for the remaining portion.
