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| Earnings at Shell and Exxon Fall Sharply in 2nd Quarter | |
| (about 1 hour later) | |
| Royal Dutch Shell, continuing to struggle with its operations in Nigeria and North America, on Thursday announced earnings that fell below analysts’ forecasts, and Exxon Mobil, the largest American oil producer, posted a 57 percent year-over-year earnings decline. | |
| Shell’s second-quarter income, adjusted for one-time items, was $4.6 billion, compared with $5.7 billion in the same period a year earlier. Analysts had expected the company to earn $5.8 billion. “This is one of the worst set of Shell results that we can remember,” analysts from Bernstein wrote in a note. | Shell’s second-quarter income, adjusted for one-time items, was $4.6 billion, compared with $5.7 billion in the same period a year earlier. Analysts had expected the company to earn $5.8 billion. “This is one of the worst set of Shell results that we can remember,” analysts from Bernstein wrote in a note. |
| Shell’s shares were down 4.7 percent in trading in London. | Shell’s shares were down 4.7 percent in trading in London. |
| Exxon Mobil reported second-quarter earnings of $6.9 billion, down 57 percent from the same period in 2012. The company said that earnings, excluding divestments and other one-time charges, were down 19 percent for the quarter. The company’s shares were down 5.7 percent in trading in New York. | |
| Exxon Mobil said that its results were hurt by lower margins and reduced volumes at its refineries. Production was down 1.9 percent year-on-year for the quarter and 2.7 percent for the half year. Capital and operating expenses were also up 10 percent, to $10.2 billion, for the quarter. Still, “Exxon Mobil’s second-quarter results reflect continued strong operational performance,” its chief executive, Rex W. Tillerson, said in a statement. | Exxon Mobil said that its results were hurt by lower margins and reduced volumes at its refineries. Production was down 1.9 percent year-on-year for the quarter and 2.7 percent for the half year. Capital and operating expenses were also up 10 percent, to $10.2 billion, for the quarter. Still, “Exxon Mobil’s second-quarter results reflect continued strong operational performance,” its chief executive, Rex W. Tillerson, said in a statement. |
| Shell’s chief executive, Peter Voser, told reporters that the situation in Nigeria, where Shell normally obtains close to 9 percent of its world production, was worsening. The country has long been a mainstay for Shell, but production there has been dogged by political and environmental issues. | Shell’s chief executive, Peter Voser, told reporters that the situation in Nigeria, where Shell normally obtains close to 9 percent of its world production, was worsening. The country has long been a mainstay for Shell, but production there has been dogged by political and environmental issues. |
| Problems in Nigeria during the quarter had lowered production by about 100,000 barrels a day, or around 40 percent, and had cost the company $250 million, Shell said. Nigerian output was hit not only by the usual sabotage aimed at stealing oil from pipelines, but also by a legal dispute between the Nigerian maritime authorities and a liquefied natural gas facility in which Shell is a partner. In the most serious episode, the maritime authorities kept L.N.G. tankers from landing at the plant from late June to mid-July until they received a large payment from the operators. | Problems in Nigeria during the quarter had lowered production by about 100,000 barrels a day, or around 40 percent, and had cost the company $250 million, Shell said. Nigerian output was hit not only by the usual sabotage aimed at stealing oil from pipelines, but also by a legal dispute between the Nigerian maritime authorities and a liquefied natural gas facility in which Shell is a partner. In the most serious episode, the maritime authorities kept L.N.G. tankers from landing at the plant from late June to mid-July until they received a large payment from the operators. |
| Mr. Voser said oil theft and disruptions to gas supply were causing widespread environmental damage and could cost the Nigerian government up to $12 billion a year. “We will play our part, but these are problems Shell cannot solve alone,” he said, adding that the company was reviewing its Nigeria operations. | Mr. Voser said oil theft and disruptions to gas supply were causing widespread environmental damage and could cost the Nigerian government up to $12 billion a year. “We will play our part, but these are problems Shell cannot solve alone,” he said, adding that the company was reviewing its Nigeria operations. |
| Shell also said it was reviewing its exploration and production portfolio in North America, where it has been losing money. The exercise, the company said, will lead to divestments and a focus on fewer projects. | Shell also said it was reviewing its exploration and production portfolio in North America, where it has been losing money. The exercise, the company said, will lead to divestments and a focus on fewer projects. |
| Over the last five years, the company has invested heavily in shale gas and oil properties, building a $28 billion portfolio. Based on drilling and exploration results in recent months, Shell is writing off about $2 billion after taxes in the shale oil areas after taking previous write-downs on shale gas acreage. The write-downs drop the book value of the portfolio to about $24 billion. | Over the last five years, the company has invested heavily in shale gas and oil properties, building a $28 billion portfolio. Based on drilling and exploration results in recent months, Shell is writing off about $2 billion after taxes in the shale oil areas after taking previous write-downs on shale gas acreage. The write-downs drop the book value of the portfolio to about $24 billion. |
| Mr. Voser said that the write-downs represented a low proportion of the North American shale portfolio, but that they reflected continued problems in the Americas, an important area for Shell. Bernstein estimated that Shell lost $4.54 for every barrel it produced in the Americas, the location of almost one-quarter of its output. | Mr. Voser said that the write-downs represented a low proportion of the North American shale portfolio, but that they reflected continued problems in the Americas, an important area for Shell. Bernstein estimated that Shell lost $4.54 for every barrel it produced in the Americas, the location of almost one-quarter of its output. |
| Shell’s overall production was down 1 percent to just over three million barrels a 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. | Shell’s overall production was down 1 percent to just over three million barrels a 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. |
| Mr. Voser will step down as chief executive in 2014. Shell announced last month that he would be succeeded by Ben van Beurden, who has led Shell’s large marketing and refining business since January. Mr. Voser said that for the next few months he would continue to run the company while Mr. van Beurden focused on marketing and refining. |