Profits halved at oil giant Shell

Published on Thursday 29 January 2009 12:25

Royal Dutch Shell today said profits more than halved in the final three months of last year.

The impact of falling oil prices led to a haul of 4.78 billion US dollars (3.35bn) for the final quarter of 2008, against 10.9 billion US dollars (7.7bn) in the third quarter and off 28% on the same period a year earlier.

Shell still reported profits of 31.37 billion US dollars (22bn) for 2008, up 14% after oil prices peaked at 147 US dollars a barrel in the summer.

Chief executive Jeroen van der Veer described the fourth quarter performance as satisfactory given the impact on demand caused by the weaker economy.

He pledged to maintain investment at near to last year's level of 32 billion US dollars (22.5bn) in order to safeguard future profitability.

Mr van der Veer added: "Industry conditions remain challenging, and we are continuing the focus on capital and cost discipline in Shell."

Shell recently postponed some Canadian oil sand projects as they required high oil prices to justify their development. The price of oil recently fell below 40 US dollars a barrel as a result of global economic conditions.

Earnings in the company's exploration and production division were down 24% to 3.71 billion US dollars (2.6 billion) in the quarter, a performance which reflected the impact of hurricanes on its North American operation last summer.

Full-year oil and gas production was broadly in line with the previous year, the company added.

Today's results were towards the bottom end of City expectations, but Shell cheered investors by announcing an 11% increase in its fourth quarter dividend.

Shares opened less than 1% lower today.

Alan Sinclair, oil and gas analyst at Seymour Pierce stockbrokers, said planned investment for 2009 of around 31.5 billion US dollars was higher than forecast but with costs set to come down, he said Shell was unlikely to be stretched by this target.