Europe’s largest oil company Royal Dutch Shell PLC reported a first-quarter net profit of US$3.49 billion yesterday, down 62 percent as oil prices fell sharply amid the global economic downturn.
The net profit figure compares with US$9.08 billion in the same period a year ago. Sales fell 49 percent to US$58.2 billion.
The company’s results are dominated by its production arm, which reported a 67 percent fall in earnings to US$1.7 billion. Both oil production and sales prices fell.
Shell said it pumped 3.32 million barrels of oil and equivalents per day, a 3.5 percent fall, because of quota restrictions by OPEC and attacks on its facilities in Nigeria.
Shell’s average selling price per barrel in the quarter was US$42.16, down from US$90.72 a year ago.
Despite the actual fall, “underlying production, compared with the first quarter of 2008, increased by some 200,000 barrels of oil per day,” Shell said in a statement.
It attributed the “underlying” increase to production from new fields and increased production at fields opened in recent years.
After seven years of declining production volumes, Shell has been investing heavily in new production and has promised an average yearly increase of at least 3 percent through 2012.
It plans US$31 billion in investments this year, compared with US$20 billion by close rival BP PLC of Britain. Shell’s first-quarter investments were US$7.1 billion, it said.
Shell said new fields that had begun production in the quarter include a large gas project on Russia’s Sakhalin Island that is expected to eventually deliver 395,000 barrels per day. It didn’t give any data on how much the Sakhalin facility is pumping now.
The company’s second largest business, refining, earned US$1.40 billion, down from US$2.37 billion a year earlier. Shell said that was because of a combination of lower volumes and worse margins. Margins improved in Asia and the US West coast, but were worse in Europe and the US Gulf Coast, which are larger markets for Shell.
The company said it planned to pay a dividend of US$0.42 per share in the first quarter, an increase of 5 percent.