Energy supermajor Royal Dutch Shell put beleaguered rival BP in the shade yesterday with a 34% year-on-year rise in second-quarter profits to £2.7billion.
The forecast-beating performance in an “uncertain” economic climate came as Shell revealed a 5% increase in production and faster-than-expected progress on its £2.2billion cost-saving plans.
Shell cut 5,000 jobs last year from its global workforce of 110,000 and is removing a further 1,000 in 2010, mainly in downstream and corporate functions, to make it more competitive compared with its rivals.
Aberdeen, where Shell employs about 1,800 in its UK hub for upstream activities – exploration and production – is not expected to see much impact from the latest job cuts.
Shell’s results highlight a sudden switch in momentum between the UK-Dutch firm and rival BP, triggered by the Gulf of Mexico disaster.
On Tuesday, BP revealed a £20.9billion hit from the massive oil spill which sent it crashing into the red for the first time in 18 years.
BP had closed the gap on Shell after years of under-performance, until the Deepwater Horizon crisis erupted in April. Shell had previously lagged behind BP in its response to the economic downturn.
Shell chief executive Peter Voser said the group, which has its headquarters in The Hague, was now on track for growth after adding to its gas interests in America
It has also started production from its Gbaran-Ubie oil and gas project in Nigeria – it will produce 70,000 barrels of oil a day when operational – and signed a gas-exploration agreement in Qatar during the quarter.
Profits were helped by better refining margins and higher oil and gas prices than in 2009, when much of the world economy was still in recession. Upstream exploration and production profits rose 56% to £2billion, while refining profits of £941million were back in the black after a deficit a year earlier.
Mr Voser said the firm continued to see mixed signals in the global economy but was pleased with the results. He added: “We are putting the priority on a sharper delivery of our strategy, aiming for profitable growth and a more competitive performance.”
Shell expects to sell up to £5.1billion in assets this year as it refocuses its portfolio on projects with higher growth potential.
Meanwhile, ExxonMobil reported stronger than expected second-quarter profits a year earlier thanks to improved oil prices and better refining margins.
The company posted earnings of £4.85billion for the period, up from £2.53billion the year before. Revenue for the quarter was £59.28billion against £47.73billion in the second quarter of 2009.
Chairman Rex Tillerson said ExxonMobil’s focus on operational excellence continued to deliver strong results, adding that the company had also focused on investing for the future with £8.59billion of capital and exploration spending so far this year, up 9% on the first half of last year.
