A Review of the Nigerian Energy Industry

Shell profits up despite 4Q slip

02 February 2012, Sweetcrude, Netherlands – Anglo-Dutch supermajor Shell saw a fall in income during the fourth quarter of 2011 despite a rise in revenue, however the company saw a 54% rise in full year profit.

Josh Lewis 02 February 2012 07:52 GMT

Shell posted a net income of $6.5 billion which was down slightly on the nearly $6.8 billion booked during the fourth quarter of 2010.

Shell chief executive Peter Voser said the company’s fourth quarter results were affected by a downturn in North American natural gas prices and industry refining margins.

The fall in profit came despite a rise in total revenue from $105.5 billion in the fourth quarter of 2010 to nearly $119.1 billion last year.

Earnings from the company’s upstream business segment were up 29% year-on-year during the fourth quarter at nearly $6.6 billion.

This came despite a 5% fall in production from nearly 3.5 million barrels of oil equivalent per day during the fourth quarter of 2010 to about 3.3 million boepd during the final three months of 2011.

Sales of liquefied natural gas were up 10% however during the quarter at 4.8 million tonnes, compared to 4.4 million tonnes a year ago.

Despite the slip in profits during the fourth quarter, the company’s full year profit surged 54% year-on-year to $30.9 billion in 2011, compared to $20.1 billion the previous year.

Revenue for 2011 totaled nearly $484.5 billion which was a 28% rise on the $378.2 billion booked for the previous 12 month period.

Helping boost revenue was a 53% jump in earnings from the upstream business segment which totaled nearly $24.5 billion.

Shell said the higher earnings from the segment reflected higher liquids and natural gas ralisations and increased trading contributions as well as higher realised LNG prices.

LNG sales volumes were also up 12% on the previous year, totaling 18.8 million tonnes.

These factors helped offset a 3% decline in production which averaged about 3.2 million boepd, compared to 3.3 million boepd in 2010.

In a separate announcement on Thursday Shell also announced plans to increase cashflow by 50% and output by a further 25% over the coming years.

Outlining its new growth agenda Shell said it expected cashflow from operations between 2012 and 2015 to be about 30% to 50% higher than the $136 billion recorded between 2008 and 2011.

It also expects output to rise to an average of about 400 million boepd by 2017-2018.

“Our improving financial position creates an opportunity to increase both our dividends and investment levels,” Voser said.

“With ramp up now well in hand for near-term growth, I want to move our agenda forward today, with new targets for the company.”

The company said it had flagged $30 billion for net capital investment during 2012 with over 80% of that figure being put towards the upstream business segment, the majority of which will be spent in North America and Australia.

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