Rising costs and a surge in oil thefts in Nigeria, among other factors, is threatening Shell’s operational profit for the second quarter of this year, a result that Peter Voser, outgoing chief executive, said it is disappointing.
Shell said it took a $700 million (461 million pounds) hit for Nigeria thefts which it said cost Nigeria itself $12 billion a year. Shell had recently put more of its Niger Delta activities up for sale.
Adjusted second quarter net earnings on a current cost of supply (CCS) basis came in at $4.6 billion, down from $5.7 billion a year ago and below analysts’ expectations of around last year’s figures. “Higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria have hit our bottom line,” said Voser, who is due to step down at the end of this year. These results, he added, were undermined by a number of factors but they were clearly disappointing for Shell.
Including adjustments, Shell’s CCS result was lower still at $2.4 billion, mainly due to a $2.2 billion charge for liquids-rich shale properties in North America “reflecting the latest insights from exploration and appraisal drilling results and production information”. Shell, Europe’s top oil company, vies with U.S.-based Chevron for the world’s number two spot among listed oil companies behind Exxon Mobil.
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