31 October 2013, News Wires – Anglo-Dutch supermajor Shell saw profits fall during the third quarter as upstream expenses rose and production fell.
The company posted a third quarter profit of just under $4.7 billion, down 35% on 2012’s nearly $7.2 billion profit during the same quarter.
The fall in profits came despite revenue rising 3.9% to $116.5 billion, compared to the $112.8 billion generated a year earlier.
Hitting the company’s bottom line however was a 29% fall in earnings from its upstream business segment to just under $3.3 billion.
Exploration expenses for the quarter rose to more than $1.6 billion, compared to just $713 million in the third quarter of 2012, mainly related to exploration well write-offs.
Shell also noted the upstream segment was hit with higher operating expenses, which included higher feasibility expenses for projects in the pre-final investment decision stage, higher decommissioning and restoration costs and increased maintenance costs.
Output during the quarter was also down slightly, averaging about 2.9 million barrels of oil equivalent per day, compared to just under 3 million boepd a year ago.
Shell attributed the dip in output the “deteriorated operating environment” in Nigeria which it said dragged output down by about 65,000 boepd compared to a year ago, while it said higher maintenance and asset replacement activities affected about 60,000 boepd of production.
Excluding the affect of the deteriorating operating environment in Nigeria, divestments and production sharing contract price effects, Shell claimed underlying third quarter output was 1% higher than during the same period last year.
“We are facing headwinds from weak industry refining margins, and the security situation in Nigeria, which continue to erode the near term outlook,” Shell chief executive Peter Voser said.
“Shell has a strong project flow in place for 2014 and beyond. We have started up a series of new oil and gas fields in the last few months, in deep-water, integrated gas, and in our longer-term plays such as Iraq.
“These new fields are part of a project flow that will drive Shell’s cash flow in 2014 and beyond, coming alongside a reduction in net spending next year as we work through a series of acquisitions, and increase the pace of asset sales. “
Shell revealed it would pay a third quarter dividend of of $0.45 per ordinary share and $0.90 per American depositary share, up 5% compared with the third quarter of 2012 but in line with last quarter’s dividend.