Shares in Shell slide as refining costs hit profits

Suzie Neuwirth

ROYAL Dutch Shell’s shares fell five per cent yesterday after the oil major posted a decline in third-quarter earnings due to narrow refining margins, higher exploration costs and security issues in Nigeria.

The FTSE 100-listed firm said that earnings excluding one-off items were $4.5bn (£2.8bn) compared with $6.6bn in the third quarter of 2012.

“We are facing headwinds from weak industry refining margins, and the security situation in Nigeria, which continue to erode the near term outlook,” said outgoing chief executive Peter Voser, who steps down at the end of this year.

“We have started up a series of new oil and gas fields in the last few months… that will drive Shell’s cash flow in 2014 and beyond, coming alongside a reduction in net spending next year as we work through a series of acquisitions, and increase the pace of asset sales.”

The firm will pay a quarterly dividend of $0.45 per share, unchanged from the previous quarter but up five per cent compared to the same period last year. BP said earlier this week that it would be increasing its dividend by 5.6 per cent.

“After a disappointing second quarter result, Shell has continued the trend in the third quarter,” said broker Investec.

“Clean net income is 13 per cent below consensus of $5.1bn and below the bottom end of a wide market range, of $4.7bn to $6bn.”