Third quarter 2014 results - October 30, 2014
On Thursday, October 30, 2014 Royal Dutch Shell plc released its third quarter results and third quarter interim dividend announcement for 2014.On this page a summarised overview of the results and links to the full set of results documents and webcast.
CFO video comment
Third quarter 2014 results CFO video comment
Hello, I am Simon Henry, the CFO of Royal Dutch Shell.
Today I’d like to give you an overview of our third quarter results and portfolio development.
Firstly on the results.
Third quarter earnings on a current cost of supplies basis, CCs basis excluding identified items,
were $5.8 billion, that is a 30% increase in CCS earnings per share versus the same quarter last year.
Earnings were supported by better Downstream margins and operating performance, by new higher-margin Upstream production, lower exploration expenses and higher Integrated Gas results.
Our overall upstream production volumes are lower, but margins are higher, as our strategy of investing in profitable projects with or without equity production pays off.
Our new projects are delivering benefits to the bottom line now.
We are having a strong year in portfolio development.
First oil at Gumusut-Kakap in Malaysia completes the list of four, Shell-operated deep water
start-ups that we’d planned for 2014.
We’ve also taken final investment decision on new deep-water fields.
And we have moved the potential 100,000 boe per day Vito field in the Gulf of Mexico into front end engineering and design, or FEED part of a project flow for the end of the decade and beyond.
We aim to grow cash flow through the business cycle and deliver competitive shareholder returns.
The priorities we set out at the start of this year have not changed.
We are taking firm actions to improve our capital efficiency by selling selected assets $12 billion of sales so far this year and the conservative balance sheet underpins the financial framework.
Dividends are our main route for returning cash to shareholders.
We have declared $11.3 billion of dividends and share buy backs in the first 9 months of 2014,
and we are expecting dividend distributions and buy-backs of over $30 billion for 2014 and 2015 combined.
This underlines our commitment to shareholder returns.
- Royal Dutch Shell’s third quarter 2014 earnings, on a current cost of supplies (CCS) basis (see Note 2), were $5.3 billion compared with $4.2 billion for the same quarter a year ago.
- Third quarter 2014 CCS earnings excluding identified items (see page 5) were $5.8 billion compared with $4.5 billion for the third quarter 2013, an increase of 31%.
- Compared with the third quarter 2013, CCS earnings excluding identified items benefited from improved Downstream and Upstream results. In Downstream, earnings benefited from increased contributions from refining including improved operating performance, and trading. In Upstream, earnings increased due to the impact of new, higher-margin production, lower exploration expenses, and higher earnings from Integrated Gas, despite the effect of lower oil prices and volumes overall. The increase of a deferred tax liability as a result of the weakening Australian dollar reduced earnings by some $400 million compared with the third quarter 2013.
- Basic CCS earnings per share excluding identified items increased by 30% versus the third quarter 2013.
- Cash flow from operating activities for the third quarter 2014 was $12.8 billion, compared with $10.4 billion for the same quarter last year. Excluding working capital movements, cash flow from operating activities for the third quarter 2014 was $11.1 billion, compared with $9.9 billion for the third quarter 2013.
- Capital investment for the third quarter 2014 was $8.5 billion. Net capital investment (see Note 2) for the third quarter was $4.8 billion, compared with $9.4 billion for the same period a year ago.
- Total cash dividends paid to shareholders in the third quarter 2014 were $3.0 billion. During the third quarter some 18.5 million shares were bought back for cancellation for a consideration of $0.8 billion.
- Gearing at the end of the third quarter 2014 was 11.7%.
- A third quarter 2014 dividend has been announced of $0.47 per ordinary share and $0.94 per American Depositary Share (“ADS”), an increase of 4% compared with the third quarter 2013.
“Shell is proud to deliver high-quality fuels, lubricants and petrochemicals, for transportation, power generation and manufacturing industries. With over 90,000 employees in more than 70 countries around the world, Shell is dedicated to delivering low-cost, safe and reliable energy for our customers.
The recent decline in oil prices is part of the volatility in our industry. It underlines the importance of our drive to get a tighter grip on performance management, keep a tight hold on costs and spending, and improve the balance between growth and returns.
Our results today show that we are delivering on the three priorities I set out at the start of 2014 – better financial performance, enhanced capital efficiency and continued strong project delivery.
We have moderated our spending on growth and accelerated disposals of our non-strategic portfolio as part of a drive to improve capital efficiency. Proceeds from asset sales so far this year total $11.6 billion, with further disposals ongoing.
Our plans to exit from Pinedale and Haynesville mark the completion of the major sales programme in our North America resources plays portfolio. We are now focusing on creating value from this slimmed-down position. Restructuring in Oil Products continues, with the completion of the divestment of Shell’s Australia positions in the quarter.
Our new investments are delivering benefits to the bottom line. We have brought four new deep-water fields on-stream this year. We are also adding new potential to the portfolio through exploration and appraisal successes.
Shell’s strategy is founded on creating value for the long term.
Our dividend per share for the third quarter of 2014 is up 4% from year-ago levels. With $8.9 billion of dividends declared and $2.4 billion of shares repurchased in the first three quarters of this year, we are on track for a programme of over $30 billion of dividend distributions and buybacks for 2014 and 2015 combined. All of this underlines the company’s recent improved performance and potential for the future.”
Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, hosted audio webcasts of the third quarter 2014 results on Thursday October 30.