Third quarter 2015 results – October 29, 2015
Oct 29, 2015
On Thursday, October 29, 2015 at 07.00 GMT (08.00 CET and 03.00 EDT) Royal Dutch Shell plc released its third quarter results and third quarter interim dividend announcement for 2015.
On this page a summarised overview of the Royal Dutch Shell plc third quarter 2015 results and links to the full set of results documents and webcast.
CFO video comment
Video transcript
CFO video comment – Q3 2015 results
Hello, I am Simon Henry, the Chief Financial Officer of Royal Dutch Shell.
Today we announced our quarterly financial results.
Shell's current cost of supply earnings for the quarter were a loss of $6 billion.
These results included $7.9 billion of identified items...
so the clean earnings were $1.8 billion.
In turn this clean figure includes a non cash negative charge
of $1 billion relating to currency movements,
which is not taken as an identified item.
There are significant one-time charges in the headline figures
which are partly a consequence of actions we are taking on the portfolio
and partly due to the impact of lower oil prices.
We are taking firm steps to review and reduce Shell's longer-term option set.
We have halted exploration activities offshore Alaska,
and stopped the construction of the Carmon Creek in-situ heavy oil project in Canada.
These decisions and the recommended combination with BG
are all part of the intent to 'grow to simplify' our company.
The announced combination with BG remains on track for completion in early 2016.
The deal is a springboard, from which we will focus on fewer
and more profitable themes, especially deep water and integrated gas.
Excluding identified items, our third quarter 2015 earnings were $1.8 billion on a Current
Cost of Supplies basis...
and earnings per share decreased by 70% from third quarter 2014.
Cash flow from operations was around $11 billion.
We continue to improve the operational performance of our assets,
and production volumes are up.
Costs are falling across the company
and overall our improvements are now contributing directly to the bottom line.
However, Upstream underlying results were a loss of $425 million,
a decrease of some $4.8 billion from year ago levels.
This was a large move and includes a $4.3 billion reduction for oil & gas prices,
and $760 million negative impact from the currency movements.
Downstream earnings were $2.6 billion,
and 46% higher than year-ago levels,
benefiting from higher realised refining margins, and lower costs.
So in headline terms, a challenging quarter...
but the underlying performance gives us confidence
that we will be able to capture the significant value available in the BG combination...
and that over time we will deliver that value back to shareholders.
Thank you for listening.
Third quarter 2015 summary of unaudited results
- Royal Dutch Shell’s third quarter 2015 earnings, on a current cost of supplies (CCS) basis (see Note 2), were a loss of $6.1 billion compared with a gain of $5.3 billion for the same quarter a year ago.
- Third quarter 2015 CCS earnings included identified items of $7.9 billion.
- Third quarter 2015 CCS earnings excluding identified items (see page 5) were $1.8 billion compared with $5.8 billion for the third quarter of 2014, a decrease of 70%. Earnings were impacted by non-cash charges of some $1.0 billion related to adverse currency exchange rate effects on deferred tax positions and financing items which were not included as identified items.
- Compared with the third quarter 2014, CCS earnings excluding identified items included improved Downstream and lower Upstream results. In Downstream, earnings benefited from steps taken by Shell to improve financial performance and from higher realised refining margins. Upstream earnings were negatively impacted by lower oil and gas prices, partly offset by lower costs, increased production volumes and improved operational performance.
- Basic CCS earnings per share excluding identified items decreased by 70% versus the third quarter 2014.
- Cash flow from operating activities for the third quarter 2015 was $11.2 billion, compared with $12.8 billion for the same quarter last year. Excluding working capital movements, cash flow from operating activities for the third quarter 2015 was $5.3 billion, compared with $11.1 billion for the third quarter 2014.
- Total dividends distributed to Royal Dutch Shell plc shareholders in the quarter were $3.0 billion, of which $0.7 billion were settled under the Scrip Dividend Programme. No shares were bought back during the third quarter.
- Gearing at the end of the third quarter 2015 was 12.7%.
- A third quarter 2015 dividend has been announced of $0.47 per ordinary share and $0.94 per American Depositary Share (“ADS”).
CEO statement
“Shell’s integrated business and our performance drive are helping to mitigate the impact of low oil prices on the bottom line, in what is a difficult environment for the industry today.
We continue to improve the operational performance of our assets, and production volumes are up. Costs are falling across the company and Shell’s performance drive is delivering at the bottom line.
Our financial framework is highly competitive, with balance sheet gearing at 12.7%, similar to year ago levels, despite a halving of oil prices. Both net investments and dividends have been covered by operating cash flow over the last year, when oil prices have averaged $60 per barrel.
While our cash flow and our operating performance in the quarter were strong, the headline numbers we’re reporting today include substantial charges. These charges reflect both a lower oil and gas price outlook and the firm steps we are taking to review and reduce Shell’s longer-term option set.
We have halted exploration activities offshore Alaska, and stopped the construction of the Carmon Creek in-situ oil project in Canada.
These are difficult, but impactful decisions. I am determined that Shell will become a more focused and competitive company as a result.
The BG deal, which remains on track for completion in early 2016, is a springboard to focus Shell into fewer and more profitable themes, especially deep water and integrated gas.”