Royal Dutch Shell Reports Weak Second Quarter Earnings

Royal Dutch Shell Reports Weak Second Quarter Earnings

Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) reported its second quarter net income is down by 53 percent from $8.66 billion during the same period last to the current $4.06 billion. Its current cost of supplies (CSS) earnings decline by 25 percent from $8 billion last year to $6 billion this year.

The company also reported that its $5.72 billion current cost of supplies earnings excluding identified items dropped by 13 percent from $6.5 billion during the same quarter a year earlier.

Its basic CCS income per share is 95 cents, down by 26 percent from $1.29; its basic CCS earnings per share excluding identified items is 91 cents, a 13 percent decrease from $1.05 during the second quarter in 2011 respectively.

Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) distributed a total of $2.8 billion. Its dividend per ordinary share is 43 cents and 86 cents per American depository share (ADS).  Based on its earnings report, the company issued $19.8 million Class A Shares under the Scrip Dividend Program during the first quarter. The company also repurchased 25.5 million Class B shares under its share buyback program.

The company’s cash flow from operating activities climbed by 33 percent from $10 billion to $13.3 billion. During the second quarter, the company produced 3,103 barrels of oil equivalent (thousands boe/d); 2 percent higher than last year excluding impact of divestments, exits, production-sharing contract (“PSC”) price effects and security impacts onshore Nigeria. Its sales volume for LNG is $4.57 million tonnes, down by 5 percent.

The company has 8,647 (million scf/d) available natural gas production for sale and 1,612 (thousand b/d) available liquids production for sale.

In a statement, Peter Voser Chief Executive Officer of Royal Dutch Shell said the weak earnings performance of the company during the second quarter this year is caused by the global economic instability and the downturn of energy prices particularly the lower gas prices in North America. Voser said, “We are moving forward in volatile times. Our profits have fallen with energy prices, but our growth strategy is delivering to the bottom line. Shell’s second quarter 2012 earnings declined from year-ago levels, with weaker oil and North American gas prices offsetting the benefit of increased upstream volumes and improved refining margins. Our profits pay for Shell’s dividends and substantial investments in new projects, to ensure affordable and reliable energy supplies for our customers, adding value for our shareholders.”

In addition, Voser said the company is implementing long-term consistent strategy to combat the instability of energy prices and allocated $32 billion organic capital investment for 2012. He pointed out that its business strategy is concentrated on competitiveness and innovation.