Europe's largest oil company
Royal Dutch Shell plc
) reported weak fourth quarter 2013 results due to high costs,
lower output, supply disruptions in Nigeria and a drop in
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Hague-based Shell reported earnings per ADR (on a current cost of
supplies basis) - excluding one-time items and gains or losses
from inventories - of 93 cents. This was well below the Zacks
Consensus Estimate of $1.33 and the year-ago adjusted earnings
per ADR of $1.80.
Moreover, Shell's revenues were down 7.5% year over year to
The Hague-based group is the first of the integrated supermajors
to come out with fourth quarter results. U.S. biggies
Exxon Mobil Corp.
) are scheduled to report later this week, while continental
) will release results next week.
For its fiscal year ended Dec 31, 2013, Shell reported profit
(excluding one-time items and inventory changes) of $6.20 per
ADR, failing to match the Zacks Consensus Estimate of $6.57 per
ADR and down from $8.06 per ADR in 2012. Revenues of $451.2
billion were 3.4% down from the year-ago period.
Upstream segment earnings during the quarter (excluding items)
were $2.5 billion, down 43.7% from $4.4 billion (adjusted) earned
in the year-ago period.
This primarily reflects the impact of lower liquids realizations,
higher exploration expenses, increased operating costs, more
number of maintenance projects, together with output disruptions
in Nigeria. These factors were partly offset by output boost from
the growth initiatives and higher LNG (liquefied natural gas)
Shell's upstream volumes averaged 3.3 million oil-equivalent
barrels per day (MMBOE/d), down 4.8% from the year-ago period.
Natural gas volumes declined 3.5%, while crude oil output was
down 6.2% from the corresponding period last year. Crude oil
contributed approximately 47% of Shell's total volumes, while
natural gas accounted for the rest.
Production during the quarter compared with the year-ago quarter
included volumes from new field start-ups and the continued
ramp-up of existing fields, which boosted output by roughly 115
Shell's worldwide realized liquids prices were 6% below their
year-earlier levels but natural gas realizations inched up 1%
from the fourth quarter of 2012. In particular, natural gas
prices in North America increased 4% from the last year's level.
LNG equity sales volumes of 4.93 million tons were down 10% from
the year-ago quarter, as more planned downtime at a number of
facilities were only partially offset by better operating
In the Downstream segment, the Anglo-Dutch super-major recorded a
profit (excluding items) of $558.0 million as against $1.2
billion in the year-ago period. The negative comparison reflects
the impacts of lower refining profitability (particularly in Asia
and Europe), together with weak marketing and trading
To some extent, these factors were offset by strong contribution
from the Motiva joint venture in the U.S. and better Chemical
During the quarter under review, Shell generated cash flow from
operations of $6.0 billion, returned $3.8 billion to shareholders
through dividends/share buybacks and spent $16.3 billion on
As of Dec 31, 2013, Shell had $9.7 billion in cash and $44.6
billion in debt (including short-term debt). Net
debt-to-capitalization ratio stood at approximately 16.1%.
Brazilian Field Stake Sale
In a separate press release, Shell announced that it has sold 23%
of its interests in the Brazilian offshore oilfield Parque das
Conchas (BC-10) to Qatar's state-owned energy company for about
Royal Dutch Shell currently retains a Zacks Rank #4 (Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next one to three months.