How is Shell Faring in 2017?

The oil industry may be on shaky ground, but according to the latest reports from Royal Dutch Shell it’s not all doom and gloom. In fact, the global oil giant recently revealed that in the first three months of 2017, its profits surged.

In early May, The Anglo-Dutch entity confirmed that from a current cost of supply measure (CCS) perspective, profits jumped to US$3.4 billion. This is a significant spike given that last year, the figure hovered around the US$1 billion mark.

OPEC spurs global oil recovery

So, what’s behind the recovery? In the first quarter of 2017, oil prices rose by 55% compared with the previous year’s figure. It was largely thanks to a deal stuck by OPEC’s oil cartel, which saw a host of both member and non-member nations slash production. This was the main driver of profits, and led Shell to report a 136% increase in CCS earnings. Shell isn’t the only one enjoying a healthy start to 2017, with rivals BP, Exxon Mobil, Chevron and Total also reporting better-than-expected results.

A pledge to “reshape” and “transform”

As well as rising oil prices, Shell’s chief executive Ben van Beurden has confirmed that the company will be investing more than US$25 billion in new oil and gas projects this year. This will bolster the company in the wake of more than US$1 billion in cost savings, budget cuts and asset sales it’s been forced to make over the past three years.

We continue to reshape Shell's portfolio and to transform the company," he said in a recent statement.

Upstream spikes, sales soar

The hard work is already starting to pay off, with oil and gas production (aka upstream) rising by 2% in the first quarter to a stable 3.752 million barrels. New fields in Brazil and Kazakhstan are supporting the flow, with van Beurden also citing earnings from refining, marketing and chemicals as big influencers. Together, sales rose by 20% to hit US$2.5 billion.

"We saw notable improvements in upstream and chemicals, which benefited from improved operational performance and better market conditions," comments van Beurden.

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