Monday, 24 September, 2018

Shell 'transformation' doubles profits as oil recovery takes hold

A driver delivers 7,500 gallons of unleaded gasoline to a Shell station in Peoria Illinois Shell 'transformation' doubles profits as oil recovery takes hold
Nellie Chapman | 04 February, 2018, 16:06

But its cash flow from operations fell 21% to $7.3 billion in the fourth quarter from a year earlier. "Tax is a help to earnings and a hurt to cash flow", Uhl told analysts.

"2017 was a year of strong financial performance for Shell", said CEO Ben van Beurden in a press release. The energy company reported $0.98 earnings per share for the quarter.

The Integrated Gas operations saw a rise in its LNG sales due to increased volumes from the Gorgon LNG project.

Still, full-year cash flow and the more than doubled profits showed that Shell is making as much money at $60 oil when it did at oil prices at $100.

A passenger plane flies behind a Shell logo at a petrol station in west London, January 29, 2015. Perhaps they expected too much? Profit adjusted for exceptional items and the changing value of oil and gas inventories surged to $12.1 billion in 2017, from $3.5 billion last time around.

Shell in the fourth quarter scrapped its scrip dividend, in a sign that it is confident of being able to maintain around $15 billion in annual dividend payments without resorting to scrip or borrowing after a three-year oil price downturn.

A surge in crude raised Shell's adjusted profits, excluding the United States tax charge and other one-off payments, stood at $4.3bn in the fourth quarter, the highest since 2014.

Production was expected to come down by 270,000 boed in 2018 as a result of divestments, including the sale of a North Sea portfolio to Chrysaor and its stake in Woodside Petroleum.

"Full year results for Royal Dutch Shell show the company emerging leaner and healthier after a period of intense pressure for the energy sector", said Steve Clayton, fund manager at stockbroking firm Hargreaves Lansdown. Barclays reissued an "overweight" rating and set a GBX 3,000 ($42.13) price target on shares of Royal Dutch Shell in a research note on Friday, January 19th.

On a quarterly basis, Shell's profit based on the current raw material price, with no one-off effects, rose by 140% to 4.3 billion Dollars, which is slightly above analyst expectations of 4.24 billion USD. The company also reported that the debt-to-equity ratio fell to 24.8% of its peak in the third quarter of 2016 when it was 29.2% thanks to a debt reduction of 74.65 billion Dollars.

Shell's figures also confirmed it took a $2bn charge in the fourth quarter from President Donald Trump's U.S. tax reforms.