Shell's profits treble as cost cuts take effect

The firm said adjusted earnings rose from £800m to £2.7bn, an increase of 245 per cent, as chief executive Ben van Beurden said he is making progress on 'reshaping the company'

Shell, the oldest energy company in Africa’s biggest oil producer, operates a joint venture with the government that pumps more than a third of the nation’s crude, the state’s main source of revenue. (Reuters)

Royal Dutch Shell has reported a large rise in second quarter profits after the energy giant was boosted by higher oil and gas prices.

The firm said adjusted earnings rose from £800m to £2.7bn, an increase of 245 per cent, as chief executive Ben van Beurden said he is making progress on “reshaping the company”.

He said: “Cash generation has been resilient over four consecutive quarters, at an average oil price of just under $50 per barrel.

“The external price environment and energy sector developments mean we will remain very disciplined, with an absolute focus on the four levers within our control, namely capital efficiency, costs, new project delivery, and divestments.

“I am confident that we are on track to deliver a world-class investment to our shareholders.”

The figures were flattered by a disastrous second quarter in 2016, when it was stung by dilapidated crude prices and costs linked to its takeover of BG Group.

This time last year Brent Crude was trading at round 45 US dollars a barrel compared to circa 50 US dollars today.

Shell is also embarking on an ambitious cost-cutting drive and a £24.6bn divestment initiative.

To this end, the oil major has sold off more than £16bn of assets since the BG takeover.

Shell this year announced it will sell off a package of North Sea assets for up to £3bn to smaller rival Chrysaor, and recently agreed to sell its stake in Irish gas project Corrib in a deal worth up to £956 million.

PA