Oil price falls cut Shell profits

Lower oil prices saw Royal Dutch Shell report earnings down by a quarter in the April to June period although production volumes are rising.

Total earnings on a current cost of supply basis were $5.964bn, against $8bn in the second quarter of last year. Analysts had been expecting a figure around $6.66bn.

Excluding movements in working capital, cash flow from operating activities in the second quarter of 2012 was $9.5bn, compared with $12.3bn in the same quarter last year.

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Capital investment over the period was $8.1bn and proceeds from divestments were some $1.8bn.

Oil and gas production was 3.103bn barrels of oil equivalent per day. On an underlying basis volumes were 4% higher than in the same period last year although liquefied natural gas sales came in 5% lower than the prior year.

Royal Dutch Shell Chief Executive Officer, Peter Voser, commented: "We are moving forward in volatile times. Our profits have fallen with energy prices, but our growth strategy is delivering to the bottom line."

Voser's explanation for the fall in earnings was weaker oil and North American gas prices but he also pointed to increased upstream volumes and growing refining margins.

The firm has confirmed a second quarter dividend of $0.43 per ordinary share, an increase of 2.4% compared with the second quarter of 2011. The group currently has a policy of announcing its proposed quarterly dividends at the start of each new financial year.

BS