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Rising gas price helps Shell boost fortunes

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Published on 28/04/2013 00:00

HIGHER natural gas prices in the United States should help Shell rebound from its lacklustre performance at the end of last year when it presents first quarter results on Thursday.

Prices have almost doubled since America’s shale gas revolution pushed prices through the floor last year, proving a drag on Shell’s recent results.

The oil major has already promised to increase its quarterly dividend by 5 per cent, confident that last year’s investment in liquefied natural gas projects in the Middle East will start paying off.

The group is ramping up production at its Pearl gas-to-liquids plant in Qatar, which is the biggest of its kind, and also has a growing joint venture with Qatar Petroleum.

Shell disappointed the City earlier this year despite reporting profits of more than £17.1 billion for 2012, as weaker than expected performance from its production arm in the final quarter left the haul 6 per cent lower year-on-year.

Chief executive Peter Voser admitted the company had faced headwinds but said its strategy for growth, which involves capital investment of more than $120bn (£78bn), meant it was on track to deliver up to $200bn of cash flow from operations between 2012 and 2015.

Tony Shepard, an analyst at Charles Stanley, said this week’s figures should help Shell put its fourth-quarter letdown behind it.

He said: “The results should be better than last time round, which was a hard quarter. The main highlight will be the performance in America, because that was quite a drag in 2012.” However, he said the company is unlikely to provide further details of drilling projects in the Arctic and South Atlantic at this stage. The work has made slow progress so far but the company is stepping up exploratory activity this year.

Shell has 30 projects under construction, which it says should unlock seven billion barrels of oil equivalent and drive continued financial and production growth. It aims to increase its dividend payments by more than European inflation levels.

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