Shell earnings rise on refining turnaround

, The Associated Press

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Peter Voser
Peter Voser

Royal Dutch Shell said Thursday it plans to continue investing aggressively in new projects in the coming years, as it sees a bright future for the oil and gas industry despite ongoing economic uncertainties around the world.

Overall, Europe's largest oil company was bullish as it reported an increase in fourth-quarter earnings: it said global energy demand is rising due to population increases and improving standards of living in developing countries.

Chief executive Peter Voser said in a video message published on YouTube that at this point "we are more constrained by limits on capital (funding) than by limits on opportunities."

Voser's bullish statement came even though the company announced a below-expectations 2.6 percent increase in net profit to $6.67 billion fourth quarter net profit.

In addition, Shell said it will hike its dividend in 2013 to $0.45 per share, a 4.7 increase from the year before. Though some analysts have argued Shell has room to raise its dividend more, Voser claimed Shell's dividend is already "the largest in our sector."

"As our cash flow momentum builds we expect to increase our dividends for shareholders in measured, affordable steps," he said. "There is more to come from Shell."

Shell's shares were down 1.1 percent to €26.545 in early Amsterdam trading.

A more detailed look at the figures showed that the company's key "upstream," or exploration and production, division posted earnings of $4.38 billion, down from $5.1 billion a year earlier. Shell blamed the decline on higher costs and exploration expenses — Shell is spending heavily to explore for oil in frigid Arctic waters off Alaska's coast, and has run into several difficulties.

Although the production profits were down, production volumes increased by 3.3 percent to 3.41 million barrels of oil or natural gas equivalents per day, as increases at major young projects in Qatar and Australia offset declines at existing fields.

The increase in fourth quarter profit was mostly due to a turnaround at Shell's smaller refining arm, which booked a profit of $1.2 billion, compared with a loss of $278 million in the same period of 2011.

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