Shares in Royal Dutch Shell (RDSB) dipped on news that third quarter net profits (on a current cost of supplies basis) fell to $4.2bn, against $6.2bn in the corresponding period in 2012. The result was 13 per cent adrift of the consensus forecast, and comes on top of a poor showing at the half-year mark.
The profit shortfall was partly down to higher exploration charges for Shell’s upstream segment, while an industry-wide fall in refining margins added to the group’s woes; profits for Total, Exxon Mobil and BP (BP.) have all been held in check on this basis. Shell also revealed a $5bn increase in its year-end capital expenditure estimate to $45bn, although the group’s net cash-flow is sufficient to cover this, along with its dividend commitments. Shareholders can take some encouragement from the performance of the group’s liquids business in the Americas, while its chemicals business has continued to strengthen.
Shell has been dogged throughout this year by oil thefts from its operations in Nigeria, a problem that is growing across the African continent. As a result, group production fell by 2 per cent on Q312 to 2.931m barrels of oil equivalent (boe). There could be more bad news in the offing as it's likely that the group will be forced to book a $200m impairment charge during the fourth quarter of 2013 because its Kulluk rig, which ran aground off Alaska in 2012, may now be too expensive to repair. However, Shell has restarted production at its 45 per cent-owned Majnoon venture in Iraq, and the group also announced that it is pressing ahead with its steam-driven Carmon Creek oil sands project in northwest Alberta, which could add another 80,000 barrels to daily production.
