The FINANCIAL — Royal Dutch Shell PLC on April 30 reported a 7% rise in first-quarter profit despite a steep fall in revenue, giving investors a glimpse of the impact weak oil prices are having on the business, according to Nasdaq.
The giant Anglo-Dutch oil company’s quarterly profit on a current cost-of-supplies basis–a number similar to the net income that U.S. oil companies report–was $4.76 billion, up from $4.16 billion a year earlier. Revenue fell to $65.71 billion from $109.66 billion a year earlier.
Profit rose despite the weaker revenue because of lower costs and one-off items, including disposals and a tax break in the U.K. The prior-year period was hit by exceptional items.
Production from the “upstream” division, which finds and produces new oil and gas, fell 2% to 3.17 million barrels of oil equivalent a day, hit by disposals, expiration of a license in Abu Dhabi, the impact of production sharing contract prices, and security issues in Nigeria, Shell said.
The oil major added that it expects production in the second quarter to fall by about 400,000 barrels of oil a day compared with the second quarter of 2014. It gave a number of reasons for the forecast fall, including recent disposals, the planned maintenance impact from the Pearl GTL in Qatar, deepwater Gulf of Mexico and heavy oil in Canada.
Earlier this month, Shell agreed to buy BG Group in a $70 billion deal, sparking speculation that weak oil prices could spur consolidation throughout the industry.
The company declared an unchanged dividend of $0.47 a share
“Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices,” Chief Executive Ben van Beurden said.
“Meanwhile, in what is clearly a difficult industry environment, we continue to take steps to further improve competitive performance by redoubling our efforts to drive a sharper focus on the bottom line in Shell,” he added.