Shell share price outperforms as oil major’s Q2 profits soar

Company unveils cash flow recovery as disposal programme continues

Shell share price outperforms as oil major’s Q2 profits soar

Shares in Royal Dutch Shell (LON:RDSA) have advanced in London this morning as the company revealed that its profits had jumped in the second quarter of the year, with the oil major benefitting from higher crude prices and strong refining performance. The Anglo-Dutch group, which has been offloading assets in the wake of the BG Group acquisition, further posted a rise in cash flow.

As of 09:30 BST, Shell’s share price had added 0.78 percent to 2,103.00p, outperforming the blue-chip FTSE 100 index which has slipped marginally into the red and is currently 0.03 percent down at 7,449.98 points. The group’s shares have added a little over three percent to their value over the past year, but are down by some six percent in the year-to-date.

Shell announced in a statement this morning that current cost of supply (CCS) earnings attributable to shareholders had soared 703 percent to $1.92 billion in the second quarter, while is CCS earnings excluding identified items had jumped 245 percent to $3.6 billion.

The company attributed the surge to higher contributions from Downstream, driven by improved operational performance and stronger chemicals and refining industry conditions. Earnings also rose on the back of higher contributions from Upstream and Integrated Gas which benefited from higher realised prices and increased production from new fields. Free cash flow for the quarter meanwhile soared to $12.16 billion, from a negative $3.16 billion a year ago.

“Shell’s strong results this quarter show that we are reshaping the company following the integration of BG,” the oil major’s chief executive Ben van Beurden commented in the statement, adding that “the external price environment and energy sector developments mean we will remain very disciplined”.

Reuters quoted Biraj Borkhataria, an analyst at RBC Capital Markets, as commenting that “Shell appears to have had a particularly strong quarter from the marketing division”.

“We see this as a decent set of numbers that should help maintain momentum on the investment case,” the analyst pointed out. 

As of 10:06 BST, Thursday, 27 July, Royal Dutch Shell Plc 'A' share price is 2,100.50p.

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