Shell Surprises Investors Twice Today

PUBLISHED: May 02 2013 @ 10:03 | Comments (0) | More info about Lou Gutheil

Royal Dutch Shell (LSE:RDSA) investors were pleasantly surprised today when the company filed its First Quarter results. Analysts had anticipated adjusted earnings to come in at, or near, the $6.5 billion mark, which would have been $800 million less than the first quarter of 2012. Instead, Shell reported an increase year-on-year of 3% from $7.3 billion to $7.5 billion, beating expectations by a healthy $1.0 billion.

Shell’s “A” share price rose by 28.0 pence (1.28%) to 2220.5 by early afternoon. RDS is the last of the major petroleum giants to report their first quarter results. Shell’s report also appears to be the best of the bunch. It’s downstream earnings more than offset a 10% decline year-on-year on the upstream side from $6.3 billion to $5.6 billion. However, this result was up by $1.2 billion from the preceding quarter. Downstream earnings were up 65% over Q1 2012 from $1.1 billion to $1.8 billion. The final number was also an increase of 55% over the $1.2 billion reported for Q4 2012.

CEO Peter Voser continued to please investors when he announced a 5% increase in dividends to $0.45 per share. He said, “We continue to take a dynamic approach to portfolio,” and that “Shell is investing for profitable growth, whilst maintaining strong capital discipline. We are developing some 30 new projects and maturing a series of further opportunities for investment. So far this year, we’ve seen the growth impact of recent start ups and we took four final investment decisions in petrochemicals, deepwater, and LNG.”

Then Voser announced the second surprise. He will be retiring from the company he has led since 2009 sometime in the first half of 2014. Voser was lauded in the media which noted that, although having the same struggles as its rivals, Voser had added “massive” projects that have propelled Shell to the leadership position in liquid natural gas . One analyst offered this accolade: “He leaves Shell in a much stronger position. He has brought real focus to the business.”

Voser’s departure includes no signs of rancor or problems, and the board has indicated that it expects an orderly transition. All in all, it was a good day for Shell shareholders.

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