Royal Dutch Shell has outpaced peers with a forecast-beating rise in quarterly profit and said it would spend heavily next year on key projects, even as oil majors prepare to weather the full impact of a sharp drop in oil prices.
Its adjusted net profit climbed 31%, thanks to more profitable new production and improved refining.
Shell has so far this year sold $12bn of assets, including the sale of its downstream Australian business in the quarter, putting it on track to hit a target of $15bn.
“It is quite likely we will take a very close look at levels of investment where we have flexibility if we see the oil price weakness persisting,” chief financial officer Simon Henry said.
Shell, Europe’s biggest oil company by market value, is “less likely”, however, to go ahead with some unconventional shale oil developments in the US Permean Basin and in West Canada, if oil hits $80 a barrel, he said.
But cuts will not slow its bigger projects and organic capital expenditure will likely remain flat in 2015 at this year’s $35bn level.
Shell’s adjusted net profit in the third quarter hit $5.8bn, with the company maintaining its dividend quarter-on-quarter and increasing it 4% year-on-year, as both upstream and downstream divisions delivered strong results.
Earnings nevertheless declined from the second quarter of the year, mostly due to weaker oil prices.
Shell has one of the most robust balance sheets in the sector, with stronger debt ratios than its peers. Analysts expect it to maintain its dividend payout and continue to buy back shares, even in the face of weaker prices.
But analysts also said Shell would not be immune from the strain on the broader sector, and some questioned whether it was doing enough.
