Shell plc second quarter 2012 results and interim dividend announcement

At 07.00 BST (08.00 CEST and 02.00 EDT) on Thursday 26 July, 2012 Royal Dutch Shell plc released its second quarter results and second quarter interim dividend announcement for 2012.
•Royal Dutch Shell’s second quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $6.0 billion compared with $8.0 billion in the same quarter a year ago.
•Second quarter 2012 CCS earnings, excluding identified items (see page 6), were $5.7 billion compared with $6.6 billion in the second quarter 2011, a decrease of 13%. Basic CCS earnings per share excluding identified items decreased by 13% versus the same quarter a year ago.
•Cash flow from operating activities for the second quarter 2012 was $13.3 billion. Cash flow from operating activities excluding movements in working capital was $9.5 billion in the second quarter 2012.
•Net capital investment (see Note 1) for the second quarter 2012 was $6.3 billion. Capital investment for the second quarter 2012 was $8.1 billion and proceeds from divestments were some $1.8 billion.
•Total dividends distributed in the quarter were $2.8 billion, of which some $0.6 billion were settled under the Scrip Dividend Programme. Some 26.5 million shares were bought back for cancellation during the quarter for a consideration of $0.9 billion.
•Gearing at the end of the second quarter 2012 was 8.1%.
•A second quarter 2012 dividend has been announced of $0.43 per ordinary share and $0.86 per American Depository Share (ADS), an increase of 2.4% compared with the second quarter 2011.
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
“We are moving forward in volatile times. Our profits have fallen with energy prices, but our growth strategy is delivering to the bottom line.
Shell’s second quarter 2012 earnings declined from year-ago levels, with weaker oil and North American gas prices offsetting the benefit of increased upstream volumes and improved refining margins. Our profits pay for Shell’s dividends and substantial investments in new projects, to ensure affordable and reliable energy supplies for our customers, adding value for our shareholders.”
Voser continued: “Our industry continues to see significant energy price volatility as a result of economic and political developments. Shell is implementing a long-term, consistent strategy against this volatile backdrop. Our plans for organic capital investment of around $32 billion in 2012 and medium-term financial and production growth are on track.
Shell has continuous improvement programmes in place to increase operational uptime and performance and to control costs. The new projects we’ve built in recent years are driving growth in the company today, and our investment decisions should drive oil and gas production for decades to come, with more than 20 key upstream projects under construction today.”
“We want leadership positions in the plays where we choose to invest, such as deepwater, integrated gas, tight gas and traditional basins, creating value for shareholders with Shell’s investment, people and innovation,” Voser said.
“Looking further into the future, Shell is following a deliberate strategy to bring more choice into the company’s next tranche of investment decisions, generating a larger range of new investment choices and growth pathways. Capital efficiency is an important part of Shell’s approach, with on-going actions to sell non-core positions, to form strategic partnerships and to add new growth positions.
Shell has continued to build high potential exploration acreage positions in 2012, including new liquids-rich shale and deepwater plays, and we are drilling important new wells over the next few months. In addition, Shell is assessing new integrated gas options in North America.”
Voser concluded: “Our strategy is focused on innovation and competitiveness. There is more to come from Shell.”
In Australia, the 4.3 million tonnes per annum (“mtpa”) capacity Pluto LNG project (Shell indirect share 20.8%) delivered its first liquefied natural gas (“LNG”) cargo to Japan. The project is expected to produce some 140 thousand barrels of oil equivalent per day (“boe/d”) at peak production.
In Canada, Shell, Korea Gas Corporation (“KOGAS”), Mitsubishi Corporation and PetroChina Company Limited announced that they are assessing a potential LNG export facility in Western Canada, near Kitimat, British Columbia. The proposed project, named LNG Canada (Shell share 40%), is expected to initially have two 6 mtpa capacity LNG trains, with an option to expand the project in the future.
In Nigeria, Shell took the Final Investment Decisions on the Forcados Yokri Integrated Project (Shell share 30%) and the Southern Swamp Associated Gas Gathering Project (Shell share 30%). These projects are expected to produce some 100 thousand boe/d and 85 thousand boe/d respectively at peak production and reduce flaring intensity.
In Oman, Petroleum Development Oman (Shell share 34%) achieved first oil at the Harweel Enhanced Oil Recovery project. The project is expected to produce some 40 thousand boe/d at peak production.
Shell agreed to divest the majority of its shareholding in its downstream businesses in Botswana and Namibia. The agreements, which are subject to regulatory approvals, now form part of the divestment of Shell’s shareholding in most of its downstream businesses in Africa as announced in February 2011.
In Australia, Shell confirmed that refining operations at its 79 thousand barrels per day (“b/d”) Clyde refinery in Sydney will cease from September 30, 2012. The Clyde refinery and the Gore Bay terminal will be converted into a fuel import facility.
In Qatar, Shell and Qatar Petroleum have entered the Front End Engineering and Design phase for a world-scale petrochemicals project (Shell share 20%) in Ras Laffan Industrial City. The scope under consideration includes a plant of up to 1.5 mtpa mono-ethylene glycol and 0.3 mtpa of linear alpha olefins.
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