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2014-10-30 18:50:00

SHELL: UP TO $5.27 BLN

SHELL: UP TO  $5.27 BLN

Royal Dutch Shell PLC on Thursday reported a 24% jump in third-quarter earnings, bucking falling oil prices and the recent sagging profits of its European peers.

The Anglo-Dutch energy giant also named Charles O. Holliday as its new chairman, replacing Jorma Ollila, who has held the position for nine years. Mr. Holliday, a former chief executive of DuPont Co. , will take over the role next year.

Shell's current cost-of-supplies profit—a measure similar to the net profit reported by U.S. oil companies—rose to $5.27 billion, from $4.25 billion a year earlier. The company increased its quarterly dividend to 47 cents a share, from 45 cents.

Shell reported improved earnings across its businesses. In its exploration-and-production division, Shell's profit was $3.95 billion, up from $3.29 billion a year earlier. The increase was largely the result of new project startups, as well as lower exploration expenses and higher natural-gas sales. The company's production declined 5% from a year earlier, to 2.79 million barrels a day of oil and equivalent natural gas volumes.

Shell Chief Financial Officer Simon Henry said Thursday that the third-quarter results reflect about one-third of the impact of the approximately 25% drop in oil price since June. He said the company is trying to "invest in profitability, and not simply volumes."

Jason Kenney, an analyst with Banco Santander, said Shell's exploration-and-production division benefited largely from the fact that new projects came online in the quarter in places such as the Gulf of Mexico that have high profit margins compared with other regions.

Shell's processing, or downstream, business saw a 77% rise in current-cost-of-supplies earnings, to $1.6 billion, even though the volumes of oil products and chemicals Shell sold declined. The improved profits were due in part to the drop in oil prices during the quarter—cheaper oil means the raw material for processing is less expensive. Positive trading results and cost cuts including divestments also helped, Shell said.

Shell's revenue in the quarter fell to $107.85 billion from $116.51 billion a year ago, and net income declined 5% to $4.46 billion.

Shell has been working to cut spending and improve profit margins since Ben van Beurden took over as chief executive in January. The former chemicals executive promised to re-evaluate the company's businesses, sell underperforming properties and reduce spending across the company.

Shell has sold $11.6 billion in assets this year, Mr. van Beurden said in a prepared statement on Thursday, and other sales are in the works. Shell's capital investment for the quarter was $8.5 billion, down from $9.7 billion a year earlier.

"We have moderated our spending on growth and accelerated disposals of our nonstrategic portfolio as part of a drive to improve capital efficiency," Mr. van Beurden said.

Shell's results stand in contrast to earnings reported this week by other big European energy companies. BP PLC on Tuesday said profit fell 25%, Total SA and Eni SpA reported earnings drops, and Norway's Statoil AS A said it ran a loss in its third quarter, the result of lower oil prices and asset write-downs.

wsj.com

Tags: SHELL, OIL, GAS, PRICES,