Shell profits drop on lower oil prices

Royal Dutch Shell’s profits fell by more than a quarter in the three months to the end of June, as lower oil prices weighed on earnings.

For the second quarter, earnings dipped 26% to under 3.5 billion dollars (£2.9 billion).

In total, first half earnings dropped 13% to 8.8 billion dollars (£7.3 billion).

The company said it had suffered from weaker pricing in the industry.

Total production increased by 4% in the second quarter to 3.6 million barrels of oil equivalent a day, but in the same period liquid prices were 8% lower and gas prices were down 13%.

Chief executive Ben van Beurden said: “We have delivered good cash flow performance, despite earnings volatility, in a quarter that has seen challenging macroeconomic conditions in refining and chemicals as well as lower gas prices.”

Dividends were left unchanged at 94 cents (78p) per share for the first half.

Shares in the company were down more than 4% in early trading on Thursday, dragging on the FTSE 100 of which Shell is a major constituent.

The group also said it would launch the third tranche of its share buyback programme, with repurchases set to total 2.75 billion dollars (£2.27 billion) over the next quarter.

Since the launch of the share buyback programme in October, Shell has bought back 294 million ‘A’ shares for 9.25 billion dollars (£7.63 billion).

The 25 billion dollar (£19.7 billion) share buyback is expected to be completed by the end of next year.

In June, bosses also revealed plans to hand over 125 billion dollars (£98 billion) to shareholders over five years, after selling non-core businesses.