Booming oil prices and cost-cutting send Shell profits surging by 49pc
Published 29/04/2010 | 05:00
ROYAL Dutch Shell announced a 49pc surge in first-quarter profits after booming oil prices and brisk growth in output in Russia and Brazil helped to underpin the effects of a cost-cutting drive.
Europe's largest oil company said that current cost of supply profits -- a key industry measure that strips out fluctuations in the price of crude oil and natural gas -- hit $4.9bn (€3.7bn) in the three months to March 31, up from $3.3bn (€2.5bn) in the same period a year ago.
The results were bolstered by the start-up of two big oil and gas projects on the island of Sakhalin in Russia and at Parque das Conchas, 110km off the coast of Brazil. These added 120,000 barrels of oil to Shell's daily production, helping to lift its average output by 6pc to 3.59 million barrels per day. The output rise has helped to reverse Shell's seven years of declining production.
Analysts said that the results also benefited from a sweeping restructuring drive under way at Shell, which was launched when Peter Voser became chief executive last July. The company shed 5,000 jobs last year and will remove another 1,000 this year, mainly in white- collar roles.
Simon Henry, Shell's chief financial officer, said: "Our operational performance in the quarter was good... We are seeing the benefits of the reduction in costs we achieved last year."
Richard Griffith, oil and gas analyst for Evolution Securities, said: "It looks as if Peter Voser is delivering. We are now seeing clear benefits from Shell's restructuring efforts starting to kick in.
The rise in profits also reflected a powerful rebound in oil prices, which stood at just over $41 (€31) in the first three months of 2009 but rallied to $76 a barrel in the same period of this year. Shell shares closed up by 46p at £20.44 (€23.50).