Royal Dutch Shell reported a 33% increase in quarterly earnings yesterday, beating analyst forecasts despite impairments of almost $2bn after producing more liquids and selling at higher prices.
The Anglo-Dutch oil company also raised its quarterly dividend and said the value of its share buybacks and dividends for 2014 and 2015 would exceed $30bn. The stock rose 3% in early trade.
Shell’s second-quarter earnings on a current cost of supplies basis excluding one-time items were $6.1bn, up 33% from a year earlier. Analysts had expected earnings of $5.46bn.
“The upstream number was good and the downstream number was better than expected,” said Jason Kenney, analyst at Santander, referring to Shell’s two largest divisions. “Although downstream was still a weak number.”
“Across the business there are some very material writedowns. There may be even more writedowns to come,” said Kenney, who has a “hold” rating on Shell’s shares.
The quarter’s earnings included a net charge of $1bn after tax with impairments of $1.943bn related mainly to gas assets in the US. The company joins rival BP in reporting better-than-expected earnings.
Chief Executive Ben van Beurden is aiming to improve returns through selling assets and more selective project choices after a rare profit warning issued in January.
Shell announced a second-quarter 2014 dividend of $0.47 per ordinary share, up 4% year on year and in line with analyst forecasts.