Shell surges in Q2

Shell has committed itself to spending over $30bn buying back its shares and handing out higher dividends over the next two years. But given the big rise in profits, some shareholders might feel slightly aggrieved by the accompanying 4 per cent increase in the interim dividend - particularly as Shell declares its dividends in US currency. Because of sterling's continued strength, UK shareholders will actually receive a dividend cut. That’s a real issue for fund managers, given that Shell is the UK’s top dividend payer.

The group benefited from increased production in the Gulf of Mexico and Iraq, together with favourable price movements for its refined products. Net second-quarter CCS profits from Shell’s exploration and production (upstream) division more than doubled to $3.8bn. And there was even positive news from Shell's refining segment, which recorded a 58 per cent increase in profits from last year to $1.27bn.

Profits would have been even stronger but for further impairment charges on the group’s US shale assets. Shell could also face problems if looming US trade sanctions hamper a Russian shale project the group is undertaking with Gazprom.

Investec anticipates adjusted 2014 EPS of 384.8¢, rising to 424.6 ¢ in 2015.