Shell announced a strong improvement in its third quarter earnings compared to a year ago due to improving industry conditions, a 5% increase in oil and gas production and a 22% increase in LNG sales and increased downstream volumes.
The company made US$3.5 billion in the quarter which represented a $500 million increase from its $3 billion earnings figure in the same time last year.
For the Middle East, Shell’s Saudi Arabian operations were highlighted in the Q3 earnings report. Shell has entered into the second contract period for the South Rub Al Khali Company Limited (SRAK) joint venture – Shell’s share is 50%. SRAK will now move forward with the appraisal of the Kidan sour gas fields.
Upstream
Shell’s oil and gas production for the quarter was 3,058 thousand boe/d, 5% higher than in the third quarter of 2009.
Production for the third quarter 2010 excluding the impact of divestments, production sharing contracts (PSC) pricing effects and OPEC quota restrictions was 7% higher compared to the same period last year.
Underlying production in the third quarter increased by some 180 thousand boe/d from new field start-ups and the continuing ramp-up of fields, more than offsetting the impact of field declines.
Strong rebound
Commenting on the results, Shell’s chief executive officer Peter Voser said: “Our results have rebounded substantially from year-ago levels, driven by some improvement in industry conditions, and Shell’s strategy. This is a better performance from Shell, achieved despite continued difficult industry conditions in refining and natural gas markets.
“We are making good progress on implementing our strategy, with a focus on performance improvement, delivering a new wave of growth, and maturing the next generation of growth options for shareholders, with achievements in all of these themes during the quarter.”
The CEO said that the oil giant achieved some $2 billion of asset sales to date, and announced the disposal of late-life oil and gas positions at Statfjord in Norway, and refining capacity at Heide in Germany during the quarter.
“Our cash generation from operations continues to improve. We expect some $7-8 billion of asset sales in the 2010-11 timeframe, including exits from non-core refining and marketing positions in Europe and Africa, and rationalisation of our tight gas portfolio in North America, following recent acquisitions there.”
Turning to growth delivery, Voser commented: “We are in a delivery window for new growth. Our new oil sands mine – Jackpine – started production during the quarter, part of the 100,000 boe/d Athabasca Oil Sands Project Expansion 1. AOSP-1 is the fifth start-up in a sequence of 13 new projects for 2010-11, which will drive us to achieve our cash flow and production targets for 2012.
“Shell has continued to make progress with longer term growth options during the quarter, with the final investment decision on two new deep water projects – the 100,000 boe/d Mars B development in the Gulf of Mexico, and Phase 2 of the BC-10 development in Brazil. We have signed a purchase agreement with East Resources, Inc., acquiring tight gas acreage in the USA, bringing our total North America gas potential resources to some 40 tcfe, completed the joint acquisition of Arrow Energy Limited, an Australian CBM-LNG play, and progressed our Brazil retail and biofuels joint venture with Cosan.”
Voser concluded: “We are making good progress against our targets, and there is more to come from Shell.”
