Shell 1Q Earnings Rose More Than Expected -- Update

--Shell's earnings increased above market views in the first quarter, reflecting stronger oil and gas prices and chemicals and refining margins

--Net debt was slashed by $4 billion as cash flows were also better than expected

--Second-quarter production is forecast to fall for both the integrated gas and upstream segments

By Jaime Llinares Taboada

Royal Dutch Shell PLC on Thursday reported improved earnings for the first quarter of the year, as oil and gas prices continued their recovery.

The Anglo-Dutch energy major posted adjusted earnings on a current cost of supply basis of $3.23 billion for the period, up from $393 million in the fourth quarter of 2020 and $2.86 billion a year earlier. This is a metric similar to the net income that U.S. oil companies report, but strips out exceptional items.

"Compared with the fourth quarter 2020, current quarter adjusted earnings reflected higher realized oil and LNG prices, chemicals and refining margins, oil products trading contributions and lower depreciation," Shell said.

Adjusted CCS earnings came in above the $3.12 billion market consensus, taken from Vara Research and based on 24 brokers' estimates.

Shell swung to a net profit of $5.66 billion in the quarter, from a $4.01 billion loss in the fourth quarter of 2020.

Cash flow from operations was also higher than expected. It totaled $8.29 billion in the period, beating the $7.51 billion market consensus--taken from Vara and based on 17 forecasts.

As a result, net debt was reduced by $4.1 billion during the quarter, to $71.3 billion on March 31. Shell has a target to reduce net debt to $65 billion before distributing 20%-30% of cash flow from operations to shareholders through dividends and share buybacks.

In addition, Shell forecast that its second-quarter integrated gas production will sit between 880,000 oil-equivalent barrels a day and 940,000 oil-equivalent barrels a day, with liquefied natural gas volumes of 7.6 million tons-8.2 million tons. This would be down from 967,000 barrels and 8.2 million tons in the first quarter.

Upstream production for the second quarter is also expected to fall, to 2.15 million barrels a day-2.35 million barrels a day, from 2.46 million in the first quarter.

Second-quarter oil products sales are forecast at 4.0 million barrels a day-5.0 million barrels a day, while chemicals volumes are expected to be between 3.5 million tons and 3.8 million tons.

The company declared a dividend of $0.1735 a share for the period, up from $0.1665 in the fourth quarter and $0.16 a year earlier.

Shares at 0714 GMT were up 22.4 pence, or 1.6%, at 1,404.6 pence.

Write to Jaime Llinares Taboada at [e-mail]; @JaimeLlinaresT

(END) Dow Jones Newswires

April 29, 2021 03:30 ET (07:30 GMT)

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