LONDON – Royal Dutch Shell PLC said Thursday its profits more than doubled in the third quarter compared with a year earlier, as improved business conditions and rising production lifted earnings.
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Shell closed out a strong set of earnings for the world's biggest oil companies, which seem to have regained a level of equilibrium after years of scrambling to adapt to a sharp drop in oil prices since 2014.
The British-Dutch giant said its quarterly profit on a current cost-of-supplies basis -- a number similar to the net income that U.S. oil companies report -- was $3.7 billion, up from $1.4 billion a year earlier.
CEO Ben van Beurden's vow that the company is in a "lower forever" mentality seems to be paying off, even as oil prices rose above $60 a barrel for the first time since 2015 in the past week. Shell's share price has climbed to levels not seen since before prices crashed three years ago.
The company has already shown it is able to cover its shareholder payouts with cash at current oil prices -- a newly important metric for investors worried about the safety of their dividends in a low-oil-price world.
Shell also managed to keep a lid on debt levels, which ballooned after its $50 billion acquisition of BG Group in 2016. Net debt fell to $67.7 billion at the end of the third quarter, compared with $77.8 billion a year earlier, helped by a continuing asset disposal program and steep cost-cutting.
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Shell's success was reflected throughout big oil's earnings in the third quarter, as the industry seems to have adjusted to lower prices.
Oil prices have staged a fragile recovery since dipping below $30 a barrel in early 2016, but remain much below their 2014 peak. The international oil price benchmark averaged around $52 a barrel in the third quarter, compared with $114 in June three years ago.
Last week, Exxon Mobil Corp and Chevron Corp. both reported increases in third quarter profits of 50% compared with the prior year. French oil major Total SA saw its earnings jump 40%. On Tuesday, British oil giant BP PLC said it could cover its spending and dividends with cash with oil at $49 a barrel.
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(END) Dow Jones Newswires
November 02, 2017 04:31 ET (08:31 GMT)