Investors Shell shocked after profits fall 60pc

Suzie Neuwirth

ROYAL Dutch Shell’s share price plunged yesterday after second-quarter results missed expectations due to rising costs, oil theft in Nigeria and weak US shale liquid production.

The oil giant’s profits fell 60 per cent over the quarter to $2.39bn (£1.57bn).

Both tranches of Shell shares fell five per cent during the day’s trading, closing around 4.5 per cent lower.

Excluding one-off charges – mostly a $2.2bn impairment for Shell’s North American shale portfolio – earnings fell 20 per cent to $4.6bn, below analysts’ forecasts of a similar figure to last year.

Some shale assets are now under review, which will lead to divestments and a refocusing of investment into fewer plays, Shell said in its statement.

The FTSE 100-listed firm said it had taken a $700m hit for Nigeria thefts and other issues in the country – which it said cost Nigeria itself $12bn a year – and for the tax impact of a weakening Australian dollar. Shell has put more of its Niger Delta activities up for sale. “Higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria have hit our bottom line,” said chief executive Peter Voser, who steps down at the end of this year.

“These results were undermined by a number of factors – but they were clearly disappointing for Shell”.

Shell has abandoned its 2017-18 production target of 4m barrels of oil per day but has maintained its target of $175bn-$200bn of cash flow from operations for the period 2012 to 2015.

Shell announced a second-quarter dividend of $0.45 per share, an increase of five per cent year-on-year.