By Justin Scheck
LONDON-- Royal Dutch Shell PLC said second-quarter earnings more
than doubled from a year earlier as the Anglo-Dutch oil and gas
group benefited from higher production of liquid petroleum and
higher prices for certain products.
Shell said Thursday that profit for the period came in at $5.15
billion on a current cost-of-supplies basis--a measure similar to
profit reported by U.S. oil companies--compared with $2.39 billion
in the same period last year. Excluding one-time items,
current-cost-of-supplies profit was $6.13 billion, up 33% from
$4.60 billion last year.
Second-quarter sales were $115.27 billion, up slightly from
$114.35 billion a year earlier.
"Our financial performance for the second quarter of 2014 was
more robust than year-ago levels but I want to see stronger, more
competitive results right across the company," Chief Executive Ben
van Beurden said in a statement.
Shell recorded impairment charges of $1.94 billion, largely
related to U.S. shale assets, an area where Shell and other big
companies have struggled to profit as smaller companies have
sparked a natural-gas boom. Mr. van Beurden said Shell's onshore
shale and so-called "tight" oil and gas business--which targets
resources trapped in underground rock--lost some $400 million in
the first half of 2014. The company is in the process of
restructuring the North American shale business.
"They've obviously made some bad-value decisions in the past,
and they're getting them out of the system," said Jason Kenney, an
analyst at Banco Santander who covers oil companies. He called the
second-quarter results "encouraging."
Mr. van Beurden said a joint-venture between Shell and Russia's
Gazprom Neft includes a shale project that could be subject to new
sanctions levied by the European Union and U.S. in response to the
fighting in Ukraine. The sanctions restrict exports of technology
to Russia for extracting oil from the Arctic, deep sea and shale.
But Mr. van Beurden said it isn't clear how the project will be
affected.
Oil and gas production during the quarter was 3.08 million
barrels of oil equivalent a day, about the same as a year
earlier.
Since taking over as CEO in January, Mr. van Beurden has
promised to improve profitability at the sprawling company.
In its exploration-and-production, or upstream, division, Shell
reported earnings of $3.82 billion, up from $1.68 billion a year
earlier. Excluding one-time items like write downs, upstream
earnings were $4.72 billion for the quarter, up from $3.53 billion
in the prior period. Shell said the division benefited from
increased production in the U.S. Gulf of Mexico and Iraq, as well
as increased shipments of liquefied natural gas from a facility
Shell bought earlier this year.
Profit in Shell's refining, or downstream, business was $1.27
billion, up 58% from a year. Excluding one-time items, profit was
up 15%, to $1.35 billion.
Shell reported a dividend of 94 cents per American depository
share, up 4% from a year earlier.
Write to Justin Scheck at justin.scheck@wsj.com
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