Shell profit rises 17% after BG purchase, countering oil’s slump

London: Royal Dutch Shell said third-quarter profit rose 17 per cent after its acquisition of BG Group boosted oil production, helping to counter a slump in prices.
Profit adjusted for one-time items and inventory changes advanced to $2.79 billion from $2.38 billion a year earlier, The Hague-based Shell said on Tuesday. That beat the $1.79 billion average estimate of 14 analysts surveyed by Bloomberg.
Chief Executive Officer Ben Van Beurden, who completed Shell’s record purchase of BG Group in February, has vowed to boost savings from the acquisition and use higher cash flows to safeguard the dividend following a two-year slump in crude. While the purchase increased Shell’s production from Australia to Latin America, it also forced the company to take on billions of dollars of debt at a time when oil prices were low.
Brent averaged $46.99 a barrel in the quarter, down from $51.30 a year earlier and $47.03 in the prior three months. The decline that began in mid-2014 has compelled explorers to delay projects, cancel billions of dollars of investments and cut jobs. Prices have increased almost 7 per cent since Opec’s surprise decision to curtail output on Sept. 28.
Van Beurden has renegotiated contacts, eliminated more than 12,000 positions and started a $30 billion asset-sale program to weather crude’s collapse. The company is preparing for a "lower forever” oil-price environment, Head of Upstream Operations Andy Brown said last month.
Shell’s B shares, the most widely traded, have increased 37 per cent in London this year. The 58-company Bloomberg World Oil & Gas Index has advanced 10 per cent in the period.
Exxon, Chevron
Exxon Mobil, the world’s biggest oil company by market value, said on October 28 its production sank to a seven-year low. The company warned it may be facing the biggest reserves revision in its history as it extended a run of profit declines. Chevron. posted its first profit in a year though production fell short of expectations. While cost cuts helped Total beat estimates, Eni reported wider-than-expected losses and Statoil posted a surprise loss.
Shell completed the acquisition of BG for $54 billion on February 15. The purchase gave it a 20 per cent share of the global liquefied natural gas market as well as high-margin oil fields in Brazil.