Oct. 29, 2009 (PR Newswire) --
LONDON, October 29 /PRNewswire-FirstCall/ --
- Royal Dutch Shell's Third Quarter 2009 Earnings, on a
Current Cost of Supplies (CCS) Basis, Were $3.0 Billion Compared to
$10.9 Billion a Year Ago. Basic CCS Earnings per Share Decreased by 72%
Versus the Same Quarter a Year Ago.
- Cash Flow From Operating Activities for the Third Quarter
2009 was $7.3 Billion, and Excluding net Working Capital Movements, was
$7.7 billion.
- Net Capital Investment for the Quarter was $7.4 Billion.
Total Dividends Paid to Shareholders During the Third Quarter 2009 Were
$2.7 Billion.
- Gearing at the end of the Third Quarter 2009 was 13.7%.
- A Third Quarter 2009 Dividend has been Announced of $0.42
per Share, an Increase of 5% Over the US Dollar Dividend per Share for
the Same Period in 2008.
Summary of unaudited results
Quarters $ million Nine Months
Q3 2009 Q2 2009 Q3 2008 %[1] 2009 2008 %
1,543 2,091 8,647 Upstream 5,818 21,843
1,292 (275) 2,419 Downstream 2,020 4,748
Corporate and Minority
155 524 (163) interest 789 (10)
2,990 2,340 10,903 -73 CCS earnings 8,627 26,581 -68
Estimated CCS adjustment for
257 1,482 (2,455) Downstream (see Note 2) 1,930 2,506
3,247 3,822 8,448 -62 Income attributable to 10,557 29,087 -64
shareholders
Basic CCS earnings per
0.49 0.38 1.77 -72 share($) 1.41 4.31 -67
0.04 0.24 (0.40) Estimated CCS adjustment per 0.31 0.40
share ($)
0.53 0.62 1.37 -61 Basic earnings per share ($) 1.72 4.71 -63
Cash flow from operating
7,350 919 12,601 -42 activities 15,828 33,631 -53
Cash flow from operating
1.20 0.15 2.05 -41 activities per share ($) 2.58 5.45 -53
0.42 0.42 0.40 +5 Dividend per share ($) 1.26 1.20 +5
[1] Q3 on Q3 change
Royal Dutch Shell (NYSE: RDS.A)(NYSE: RDS.B) Chief Executive Officer Peter Voser commented:
"Our third quarter results were affected by the weak global economy. Upstream and Downstream profitability has been sharply reduced compared to year-ago levels. We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery. Despite Shell's good operating performance in this difficult environment, we have embarked on an ambitious programme of stringent measures to further improve our performance."
"We continue to focus on improving our competitive cost position, simplifying Shell, and increasing personal accountabilities. The Transition 2009 programme, which I announced earlier this year, is progressing well, and will be completed by the end of 2009. Some 5,000 employees are leaving Shell as a result of these changes. This represents around a 10% reduction in employees in the redesigned divisions and corporate functions."
"We have reduced operating costs by some $1.0 billion in the first nine months of 2009 compared to the same period in 2008. This reduction excludes the impact of exchange rate movements and non-cash pension costs."
"I am pleased with the portfolio progress in the third quarter. In Russia, production ramp-up of the Sakhalin II LNG project has been achieved ahead of schedule. In Australia, we have launched the Gorgon project, which will supply global LNG markets for decades to come."
Voser concluded: "Our strategy remains on track, although the near-term industry outlook remains challenging. We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years."
Third quarter portfolio developments
In Australia, Shell and its partners took Final Investment Decision (FID) for the Gorgon LNG project (Shell share 25%). Gorgon will supply global gas markets to at least 2050, with capacity of 15 million tonnes (100% basis) of Liquefied Natural Gas (LNG) per year and a major carbon capture and storage (CCS) scheme.
Shell has announced a Front-End Engineering and Design (FEED) study for a Floating Liquefied Natural Gas (FLNG) project, with the potential to deploy these facilities at the Prelude offshore gas discovery in Australia (Shell share 100%).
In the USA, Gulf of Mexico, Shell participated in an oil discovery at the Vito well (Shell share 55%), in sub-salt Miocene reservoirs. In offshore western Australia, Shell participated in the Achilles gas discovery (Shell share 25%). In the North America Haynesville and Groundbirch tight gas areas there is ongoing encouragement from exploration and appraisal well test results.
In Canada, the Government of Alberta and Government of Canada jointly announced their intent to contribute $0.8 billion of funding towards the Quest CCS project. Quest, which is at the feasibility study stage, could capture CO2 from the Athabasca Oil Sands Project at the Scotford Upgrader, for underground storage.
In Russia, the Sakhalin II project (Shell share 27.5%) achieved peak production of some 400 thousand barrels of oil equivalent per day (boe/d), and successfully ramped up production at the two LNG trains, ahead of schedule.
Shell continues with its strategy to refocus its Downstream footprint, and to make selective new investments in its larger, integrated refining sites and growth markets. Some 15% of Shell's worldwide refining capacity, or some 600 thousand barrels per day, is earmarked for possible disposal or conversion to oil terminals.
In the Netherlands, Shell started construction this October of a new hydrodesulphurisation plant at the Pernis refinery to manufacture cleaner-burning oil products.
In Greece, Shell, as part of its strategy to concentrate its global Downstream portfolio, agreed to sell its activities for some $0.4 billion. The retail network will continue to operate under the Shell brand. This transaction is subject to regulatory approvals.
Key features of the THIRD quarter 2009
Third quarter 2009 CCS earnings were $2,990 million, 73% lower than in the same quarter a year ago.
Third quarter 2009 reported earnings were $3,247 million compared to earnings of $8,448 million in the same quarter a year ago.
Basic CCS earnings per share decreased by 72% versus the same quarter a year ago.
Cash flow from operating activities for the third quarter 2009 was $7.3 billion, compared to $12.6 billion in the same quarter last year. Excluding net working capital movements of $0.4 billion, cash flow from operating activities was $7.7 billion in the third quarter 2009, compared to $10.4 billion for the third quarter 2008 on the same basis.
Total dividends paid to shareholders during the third quarter 2009 were $2.7 billion.
Capital investment for the third quarter 2009 was $7.8 billion. Net capital investment (capital investment, less divestment proceeds) for the third quarter 2009 was $7.4 billion.
Return on average capital employed (ROACE), on a reported income basis (see Note 3), was 4.9%.
Gearing was 13.7% at the end of the third quarter 2009 versus 6.0% at the end of the third quarter 2008.
Upstream
Oil and gas production for the third quarter 2009 was 2,926 thousand boe/d, in line with the same quarter last year. Underlying production increased, compared to the third quarter 2008, with new field start-ups and the continuing ramp-up of fields more than offsetting the impact of field declines.
LNG sales volumes of 3.49 million tonnes were 13% higher than in the same quarter a year ago.
Downstream
The weak global economy continued to impact downstream volumes. Oil Products marketing sales volumes were 4% lower than in the third quarter 2008. Chemical product sales volumes in the third quarter 2009 decreased by 5% compared to the third quarter 2008.
Oil Products refinery availability was 94% compared to 88% in the third quarter 2008. Chemicals manufacturing plant availability was 95%, 9% higher than in the third quarter 2008. Third quarter 2008 availability, in both Oil Products and Chemicals, was adversely impacted by hurricanes in the USA.
Supplementary financial and operational disclosure for the third quarter 2009 is available at http://www.shell.com/investor.
Summary of identified items
Earnings in the third quarter 2009 reflected the following items, which in aggregate amounted to a net gain of $371 million (compared to a net gain of $2,813 million in the third quarter 2008), as summarised in the table below:
Upstream earnings included a net charge of $123 million, reflecting charges related to asset impairments and restructuring provisions. These were partly offset by gains related to tax credits, mark-to-market valuation of certain gas contracts and the estimated fair value accounting of commodity derivatives (see Note 7). Earnings for the third quarter 2008 included a net gain of $2,368 million.
Downstream earnings included a net gainof $536 million, reflecting gains related to the estimated fair value accounting of commodity derivatives (see Note 7) and tax credits, which were partly offset by charges related to asset impairments and restructuring provisions. Earnings for the third quarter 2008 included a gain of $445 million.
Corporate and Minority interest earnings included a charge of $42 million, related to restructuring provisions and tax charges.
SUMMARY OF IDENTIFIED ITEMS[1]
Quarters $ million Nine Months
Q3 2009 Q2 2009 Q3 2008 2009 2008
Segment earnings impact of
identified items:
(123) (115) 2,368 Upstream 92 2,089
536 (678) 445 Downstream (347) (30)
(42) (17) - Corporate and Minority interest 103 -
371 (810) 2,813 CCS earnings impact (152) 2,059
[1] As from the second quarter 2009, the summary of identified
items includes the estimated fair value accounting of commodity
derivatives related to operational activities (see Note 7). For
comparison purposes, the third quarter 2008 was reclassified by a
gain of $400 million in the Upstream segment and by a gain of
$350 million in the Downstream segment.
These identified items generally relate to events with an impact of more than $50 million on Royal Dutch Shell's earnings and are shown to provide additional insight into its segment earnings, CCS earnings and income attributable to shareholders. Further additional comments on the business segments are provided in the section 'Earnings by Business Segment' on page 5 and onwards.
EARNINGS BY BUSINESS SEGMENT
UPSTREAM
Quarters $ million Nine Months
Q3 2009 Q2 2009 Q3 2008 %[1] 2009 2008 %
1,543 2,091 8,647 -82 Upstream earnings 5,818 21,843 -73
4,168 4,006 12,496 -67 Upstream cash flow from 13,952 34,482 -60
operations
5,879 5,497 11,614 -49 Capital investment 17,269 25,215 -32
1,648 1,647 1,689 -2 Crude oil production 1,670 1,770 -6
(thousand b/d)[2]
Natural gas production
available for sale
7,411 7,614 7,207 +3 (million scf/d) 8,250 8,246 -
Barrels of oil equivalent
2,926 2,960 2,931 - (thousand boe/d) 3,092 3,192 -3
3.49 2.89 3.10 +13 LNG sales volumes (million 9.44 9.69 -3
tonnes)
[1] Q3 on Q3 change
[2] Includes oil sands bitumen production
Third quarter Upstream earnings were $1,543 million compared to $8,647 million a year ago. Earnings included a net charge of $123 million related to identified items, compared to a net gain of $2,368 million in the third quarter 2008 (see page 4).
Upstream earnings compared to the third quarter 2008 reflected the impact of significantly lower oil and gas prices. These impacts were partially offset by increased gas sales volumes, including the effect of the successful start-up of the Sakhalin II project, and lower royalty and tax expenses compared to the third quarter 2008.
Third quarter 2009 oil prices increased from second quarter 2009 levels. However mainly due to contractual time lag effects the third quarter 2009 global natural gas realisations remained similar to second quarter 2009 levels. A generally weak environment for natural gas marketing and trading activities also affected the third quarter 2009 earnings.
Global liquids realisations were 43% lower than in the third quarter 2008. Global gas realisations were 42% lower than a year ago. In the Americas, gas realisations decreased by 64% whereas outside the Americas, gas realisations decreased by 29%. LNG realised prices compared to the third quarter 2008 decreased following trends in LNG price markers.
Third quarter 2009 production was 2,926 thousand boe/d compared to 2,931 thousand boe/d a year ago. Crude oil production was down 2% and natural gas production increased by 3% compared to the third quarter 2008.
Underlying production, compared to the third quarter 2008, increased by some 180 thousand boe/d from new field start-ups and the continuing ramp-up of fields over the last 12 months, more than offsetting field declines.
LNG sales volumes of 3.49 million tonnes were 13% higher than in the same quarter a year ago.
