AMSTERDAM: Refining and trading cushioned a drop in Royal Dutch Shell’s first quarter profits, which fell less than expected after the collapse in oil prices slashed earnings from oil and gas output.
Europe’s biggest oil company by market value also said it was still looking for acquisitions after agreeing to buy rival BG for $70bn (€62bn) in the biggest oil merger of the past decade, but lacked resources to perform another mega-deal.
“We will look at anything we might be interested in … We don’t have a lot of cash left to be doing much more,” chief financial officer Simon Henry said.
Shell is working hard to execute the BG deal as soon as possible before investors in BG start to take a more critical look at the terms amid a recent recovery in oil prices.
Shell’s BG deal fuelled expectations the industry will go through a wave of consolidation, and earlier this week Britain warned potential suitors of BP it would oppose any takeover bid.
Shell’s first quarter performance resembled those of rivals BP and Total which this week reported stronger than expected profits thanks to refining, a segment the firms have struggled to rationalise in recent years but which proved valuable in the recent oil price downturn.
Norway’s Statoil, which owns little refining capacity, had a modest uplift from downstream and reported a net loss on the back of a $6bn non-cash writedown on its US shale business.
“Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices,” Shell chief executive Ben van Beurden said. Shell however lowered its 2015 planned capital investment to $33bn from an earlier guidance of $35 bn.
The cut is lower than its rivals in the sector which reduced 2015 upstream spending by 10pc to 15pc. Shell reported a 56pc drop in first quarter net income at $3.2bn, beating analysts’ expectations of $2.4bn profits.
