Buoyed by an increase in the production of liquid petroleum and higher oil prices, Royal Dutch Shell plc (NYSE:RDS.A) posted a profit of $5.1 billion in the second quarter -- more than double the $2.4 billion it earned in the second quarter of 2013, according to quarterly numbers released by the company Thursday.
The Anglo-Dutch oil company’s second-quarter earnings, after accounting for fluctuations in oil prices, and excluding one-time items, stood at $6.1 billion -- a 33 percent increase over $4.6 billion in the second quarter of 2013.
In its exploration-and-production, or upstream, division, Shell reported earnings of $3.8 billion, up from $1.6 billion a year earlier. The company attributed the rise in profit to increased production in the Gulf of Mexico and Iraq.
However, the company stated that the half-yearly downstream, or refining business, was affected by “weaker refining industry conditions in Asia and Europe.” The downstream earnings in the first half of 2014 were reduced marginally to $2.9 billion against $3 billion in the first half of 2013.
Shell also announced a $1 billion write-down for impaired U.S. shale oil assets, many of which have been sold off.
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“Shell completed the divestment of its 100 percent interest in approximately 106,000 net acres of the Eagle Ford liquids-rich shale assets to Sanchez Energy Corp (NYSE:SN) for a consideration of some $0.6 billion...Major divestments of non-core liquids-rich shales positions are now complete,” the report stated.
CEO Ben Van Beurden said in a statement that the company was “making progress with the priorities I set out at the start of 2014 -- to balance growth and returns by focusing on better financial performance, enhanced capital efficiency, and continued strong project delivery.”
He also announced that Shell would spend $7 billion to $8 billion in 2014 and 2015 combined to buy back the company's shares, “of which $1.6 billion were completed in the first half of this year (2014).”
“These expected buybacks and dividend distributions are expected to exceed $30 billion over the two-year period,” he said, adding that the company would be increasing the dividend payout to investors by 4 percent.