Royal Dutch Shell has reported an annual fall in second quarter earnings amid a weakened Australian dollar and disruption to operations in Nigeria.
Earnings in the second quarter of the year fell to $2.4bn (£1.48bn) after net charges of $2.2bn after tax - mainly due to impairments in upstream earnings.
Excluding an accounting adjustment, second quarter earnings came in at $4.6bn, down from $5.7bn the year before. Basic earnings per share fell 21 per cent to 0.73 cents (down 39 per cent from the previous quarter).
Shell said earnings were hit by a number of factors including the negative impact of the weakening Australian dollar on a deferred tax liability, a deteriorating operating environment in Nigeria from oil theft and supply disruption, higher operating expenses and depreciation generally, and increased exploration well write-offs.
Chief executive Peter Voser said the results were “disappointing”, but remains optimistic about the future – pointing to five major new projects expected to begin in the next 18 months and generate over $4bn to the company’s 2015 cash flow, and said the company would be focusing on financial performance over oil and gas volumes.
We've made substantial improvements to our portfolio in the last few years. Today, Shell is rich with new investment opportunities and is capital constrained - the opposite position to where the company was in the middle of the last decade….
Our strategy is to deliver sustainable growth in cash generation through the business cycle, underpinning Shell's competitive dividends and returns. We are not targeting oil and gas production volumes; rather we are focusing on financial performance.
Dividends are Shell's main route for returning cash to shareholders and we have distributed more than $11 billion of dividends in the last 12 months. So far this year, we have repurchased more than $3 billion of shares, and we are on track for $4-5 billion of share buy-backs in 2013. This underlines our commitment to shareholder returns.
Shares in Shell opened down three per cent and remain suppressed.