Shell misses third quarter forecasts as refining, Nigeria weigh

Thursday 31 October 2013 08.04
Shell's CEO Peter Voser due to step down at the end of the year
Shell's CEO Peter Voser due to step down at the end of the year

Royal Dutch Shell's third quarter profits undershot analysts' forecasts as a weak refining environment and production losses due to disruption in Nigeria weighed on its performance.

Third quarter earnings excluding identified items and on a current cost of supply basis came in at $4.5 billion compared with a forecast range of between $4.9 and $5.1 billion and down from $6.6 billion a year ago.

Chief executive Peter Voser, who steps down from the western world's third biggest oil company at the end of the year, said actions taken during the quarter "underline our commitment to shareholder returns".

This echoes an industry theme for the quarter as the sector underperforms the broader market.

The world's biggest oil company Exxon Mobil reports results later today.

The big drop in Shell profits was led by the significantly weaker industry refining conditions, that have been widely flagged by the company and others in the industry.

Rising costs in both production and finding operations in the main oil and gas division were also a major factor in the weaker results, along with production volume impacts from maintenance and asset replacement activities.

The fall also reflected the impact of pipeline outages in Nigeria, much of which Shell puts down to sabotage and theft, and lower dividends from an Liquefied Natural Gas venture.

Nigeria outage cost Shell 65,000 barrels a day worth of production. Total oil and gas output for the quarter was 2.931 million barrels of oil equivalent, down 2% on the same time last year.

On the upside, Shell benefited from higher contributions from chemicals and increased underlying upstream production volumes, led by Integrated Gas.

Voser surprised investors by announcing an early retirement from his role earlier this year. He will be replaced by Ben van Beurden in January.