Don't Miss


Home   >   Business   >   Industries   >   Energy   >   Shell’s profits hit by crude theft in Nigeria

Shell’s profits hit by crude theft in Nigeria

By on November 2, 2013

Royal Dutch Shell, on Thursday said the frequent crude output stoppages in Nigeria took its tolls on the company’s 2013 third quarter profits and performance, which undershot analysts’ forecasts.

The company faces incessant production shut-in in Nigeria, weak refining profit margins and higher production costs, which cost it 65,000 barrels a day worth of production.

The fall also reflected the impact of pipeline outages in Nigeria, much of which Shell puts down to sabotage and theft, and lower dividends from an Liquefied Natural Gas (LNG) venture.

Total oil and gas output for the quarter was 2.931 million barrels of oil equivalent, down 2 percent on third quarter 2012 figures.

Third quarter earnings excluding identified items and on a current cost of supply basis came in at $4.5 billion (2.8 billion pounds) compared with a forecast range of between $4.9 and $5.1 billion, down from $6.6 billion a year ago.

Following the less than expected result, the company’s share price fell 4.6 percent to 24.3 pounds during the early morning trading session. Expectations had been high after better-than-forecast BP results on Tuesday.

Chief Executive Peter Voser, who steps down from the western world’s number three oil company at the end of the year, said actions taken on costs and shareholder payouts during the year so far “underline our commitment to shareholder returns”, echoing an industry theme for the quarter as the sector underperforms the broader market and investors fear rising costs will eat into capacity to pay dividends.

World number one Exxon Mobil reports results later on Thursday.

The big drop in Shell profits was led by the significantly weaker industry refining conditions that have been widely flagged by the company and others in the industry.

But rising costs in both production and finding operations in the main oil and gas division were also a major factor along with production impacts from maintenance and asset replacement activities.

On the upside, Shell benefited from higher contributions from chemicals and increased production of LNG – an industry it has bet much of its future on.

 

[Daily Independent]