Royal Dutch Shell posted profits of £2.26billion yesterday for the first three months of 2009, down 58% on a year earlier.
The company expresses its earnings on a current-cost-of-supply basis, which strips out unrealised gains or losses on the value of inventories.
The British-Dutch firm made profits of £22billion last year, but, in line with rival BP on Tuesday, it said the weaker global economy had affected its performance.
In addition to oil prices below $50 a barrel, having peaked at $147 last July, Shell has been affected by security concerns in Nigeria, Opec quota restrictions and weakening industrial demand for natural gas.
Chief executive Jeroen van der Veer said first-quarter performance was affected by the weaker global economy, with a challenging upstream and downstream business environment.
He said the company continued to make significant investments to maintain future profitability.
He added: “Industry conditions remain challenging, and our focus is on capital discipline and costs.
“We are taking a prudent approach to this downturn, focused on sustaining a strong position in the energy landscape.”
The figures were better than expected by the market, with profits before one-off items of £2.03billion, compared with a City consensus forecast of £1.78billion.
Revenue for the quarter came in at £39.88billion, almost half of the £78.29billion achieved 12 months earlier.
BP reported a sharp drop in profits on Tuesday, with its first-quarter haul falling 62% to £1.64billion, although this figure was also stronger than market forecasts.
Shell promised earlier this year to maintain net investment at near to last year’s £21.9billion to safeguard future profitability.
The company said that first-quarter production was some 3.32million barrels of oil equivalent per day (boepd), excluding production from tar sands, compared with 3.33million boepd a year earlier. Oil production was down 7% and natural gas production in line with the first quarter of 2008.
Although the overall outcome was better than expectations, analyst Tony Shepard at broker Charles Stanley, said that the make-up of the results was less encouraging.
He pointed to a 74% drop in exploration and production earnings at £924million, which he said could be the worst performance in the industry over the quarter.
Shell’s shares were 29p higher, however, at £15.39.
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