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Royal Dutch Shell $RDSA reported strong first quarter results Thursday, profits up 42% on the quarter. Shell, the first big oil earnings to report beat analysts forecasts boosted by prior cost cutting, strong refining operations, chemicals and a rise in LNG and oil prices.

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Earnings

Net income attributable to shareholders on a current cost of supplies (CCS) basis (net profit), and excluding identified items was $5.322 billion from a year ago. Results beat a consensus of $5.277 billion. Over the same quarter last year, net income was $3.754 billion.

Royal Dutch Shell plc (ADR) ADR Class A NYSE: RDS.A

Market Reaction 70.25 USD −0.92 (1.29%)  at Apr 26, 3:48 PM EDT 

"Shell's strong earnings this quarter were underpinned by higher oil and gas prices, the continued growth and very good performance of our Integrated Gas business, and improved profitability in our Upstream business," CEO Ben van Beurden said in a statement.

Highlights

  • Capital investment of $5.183 million in the first three months of 2018 vs. $4.720 as reported a year ago. 
  • Shell maintained its quarterly dividend at $0.47 as expected. 
  • Shell reported that during the second quarter of 2018, the integrated gas business will have between 140-160 Mboe/d in added production volumes and LNG volumes will be flat.
  • $RDSA said the upstream division will see a drop of 230-260 Mboe/d due to asset sales, lower volumes across certain fields and higher maintenance.
  • Shell reported that in the first quarter of 2018, their downstream business had refining processing intake of 2,637 Mbbl/d, increasing from the fourth quarter's average of 2,589 Mbbl/d.
  • Oil product sales were down slightly to 6,785 Mbbl/d and chemical sales slipped to 4,514 thousand tonnes.
  • Shell reported first quarter 2018 production from the integrated gas segment averaging 4,407 Mmcf/d with 212 Mbbl/d in liquids also available for sale.
  • Intergrated gas segment produced 8.9 million tonnes of LNG while selling 18.58 million tonnes.
  • First quarter 2018 upstream production of 2,867 Mboe/d, rising from fourth quarter 2017 volumes of 2,775 Mboe/d.
  • Natural gas volumes totaled 7,505 Mmcf/d and liquids reached 1,573 Mbbl/d.

Divesture Program

Shell continues on it's divesture program to reduce debt with it'd debt to equity ratio falling from from a peak of 29.2 percent in the third quarter of 2016 that followed its $54 billion acquisition of BG Group. Shell said there are on track to meet its target of $30 billion in divestments between 2016 and 2018. The company recently completed the sale of a package of assets in the North Sea and Gabon.

During the fourth quarter, Shell completed the sale of the LPG marketing business in Hong Kong and Macau to DCC PLC for USD150.3 million as well as cancelling the sale of AS Dansk Shell, made up of the Fredericia refinery and associated activities.

Disposals for the quarter were $768m (UBSe $825m). Net debt came in at $66.1bn vs UBS estimates of $62.6bn, and gearing of 24.7% was above UBSe 23.9%.

Results for Shell are scheduled for release on April 26, second quarter on July 26, and third quarter results on November 1. 

Shell said to consider bid for Italian solar company

Bloomberg reported yesterday that Shell is weighing a bid for the Italian solar company RTR, owned by Terra Firma Capital, the PE fund run by Guy Hands.

Shell is reportedly preparing to submit an offer with a partner. Terra Firma started a sale process in March, and valued RTR at EUR1.5bn. RTR has also attracted attention from Italian energy companies Enel, Erg, and A2A and a range of international companies. 

Source: Royal Dutch Shell

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