LONDON — Royal Dutch Shell, the oil and natural gas giant, followed other oil producers in announcing earnings below analysts’ forecasts for the second quarter. Shell’s income, adjusted for one-time items, was $4.6 billion, compared with $5.7 billion in the same period a year earlier. Analysts expected the company to earn $5.8 billion.
“These results were undermined by a number of factors, but they were clearly disappointing for Shell, ” the company’s chief executive, Peter R. Voser, said in a statement Thursday.
Mr. Voser blamed the sharp decline on higher costs, foreign-exchange issues and production lost as a result of sabotage in Nigeria, an important area for Shell. Shell said the problems in Nigeria had lowered production by an average of 100,000 barrels a day during the quarter. Shell said it was reviewing its troubled Nigerian onshore operations and might sell leases producing up to 100,000 barrels per day. The company said the deteriorating security situation in Nigeria as well as a blockade of its Nigerian liquefied natural gas joint venture cost at least $250 million in the quarter.
Shell, based in London, also took net write-offs of $1.85 billion, including a write-down of about $2 billion on natural gas acreage in the United States, where a decline in fuel prices has led the company to re-evaluate its holdings.
Shell also said it was reviewing its North American exploration and production portfolio, where it has been losing money. This exercise, the company said, will lead to divestments and a sharper focus on fewer projects.
Mr. Voser said this year that he would step down as chief executive at the start of 2014. Shell announced last month that he would be succeeded by Ben van Beurden, a relatively unknown executive who has headed Shell’s large marketing and refining business since January.
Other companies have also posted lackluster results, including BP, which reported earnings Tuesday, and ENI of Italy, which is releasing results Thursday. BP, which made substantial divestments after the oil spill in the Gulf of Mexico in 2010, blamed lower oil prices and higher tax rates, especially in Russia, while ENI was hurt by continuing problems, including an investigation into alleged corruption in Algeria at its Saipem engineering and oil services subsidiary.
Shell’s results were also hurt by big bets on natural gas. The company’s production of oil, which tends to be substantially more profitable than gas at current prices, declined 7 percent, compared with the same period a year earlier, while gas output increased 5 percent. Shell’s overall production was down 1 percent to just over three million barrels per day. Its output for the quarter was slightly less than that of its rival BP if the company’s share of almost 20 percent of output from Rosneft, the Russian state-controlled oil company, is included.
Article source: http://www.nytimes.com/2013/08/02/business/global/shell-reports-disappointing-earnings-in-second-quarter.html?partner=rss&emc=rss