Shell Reports 62% Profit Slump

Oct. 29, 2009
Near-term industry outlook remains challenging as market volatility continues, oil giant says.

British energy giant Royal Dutch Shell revealed a 62% net profit slump in the third quarter on Thursday, blaming weak oil prices and warning that the outlook is cloaked in uncertainty.

Quarterly profit amounted to $3.25 billion, compared with $8.45 billion in the same period of 2008 -- when oil had struck record peaks above $147 per barrel.

"Our third quarter results were affected by the weak global economy," said Shell Chief Executive Peter Voser in a results statement, adding that 5,000 jobs will be axed by the end of 2009 in a cost-cutting program announced earlier this year.

"We see some indications that energy demand and pricing are improving but the outlook remains very uncertain and we are not expecting a quick recovery," he said. "Our strategy remains on track, although the near-term industry outlook remains challenging."

The company added that oil and gas production was flat at 2.93 million barrels of oil equivalent per day.

Revenues tumbled 43% to $75.01 billion.

The oil sector reaped massive profits last year as oil prices rocketed to record heights before falling sharply by the end of 2008 as the global economic slump ravaged demand. In recent weeks, they have soared to one-year highs around $82 on hopes the economy will recover steadily, but the market remains volatile.

Earlier this week, Shell's rival BP reported that its third-quarter net profit sank 34% to $5.34 billion, also hit by lower oil prices.

Shell has sought to implement a major cost-cutting program as it fights back against the downturn.

"We continue to focus on improving our competitive cost position," Voser said. "The Transition 2009 program... is progressing well and will be completed by the end of 2009."

Copyright Agence France-Presse, 2009

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