Profits fall but Shell insists it is still on track

By GARETH MACKIE
Published on 01/11/2012 10:31

SHELL has insisted its strategy to boost production remains on track despite suffering a drop in third-quarter profits on the back of lower oil and gas prices.

The group, which is listed in both the Netherlands and the UK, also moved to reassure investors that it was making progress with its exploration programme in Alaska, where operations have been suspended until the ice retreats next year.

So far, it has spent more than $4 billion (£2.5bn) to obtain licences and prepare for exploratory drilling in the Beaufort and Chukchi seas, after a long struggle against environmental groups who say seeking oil in the icy waters is too risky.

Chief executive Peter Voser said: “This will be a multi-year exploration programme, demonstrating Shell’s commitments to high standards on sustainable development and safety.”

The group posted a profit of $6.6bn for the three months to 30 September, down from $7bn a year earlier, as production dipped slightly to just under three million barrels a day.

Excluding the impact of disposals and the loss of production in Nigeria over safety fears, output would have been 1 per cent higher. Nigerian output has also been hit by flooding in the Niger Delta.

Despite the fall in profits, the results came in ahead of analysts’ expectations and the group raised its quarterly dividend by 2.4 per cent to 43 cents a share.

Stuart Joyner, an analyst at Investec, said: “Shell is continuing to generate substantial cash flows and we expect the priority to be re-investment but the company could afford a more generous dividend if it chose to.”

On Tuesday, rival BP cheered investors with a 12.5 per cent uplift in its third-quarter dividend to 9 cents a share as profits rose 40 per cent on the second quarter and it benefited from better refining margins.