Rising costs, Nigeria thefts blot Shell profits
Thefts cost Shell $700 million, adding to ‘disappointing’ results
Shell said it took a $700 million hit for Nigeria theft. The company recently put more of its Niger Delta activities up for sale. Photograph: Simon Dawson/Bloomberg
Rising costs and a surge in oil thefts in Nigeria, among other factors, hit Royal Dutch Shell’s second quarter profits, a result that outgoing chief executive Peter Voser called “disappointing”.
Shell said it took a $700 million hit for Nigeria thefts - which it said cost Nigeria itself $12 billion a year - and for the tax impact of a weakening Australian dollar. Shell recently put more of its Niger Delta activities up for sale.
Adjusted second quarter net earnings on a current cost of supply (CCS) basis came in at $4.6 billion, down from $5.7 billion a year ago and below analysts’ expectations of around last year’s figures. Shell shares company dipped 4.4 percent.
“Higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria have hit our bottom line,” said Mr Voser, who is due to step down at the end of this year. “These results were undermined by a number of factors - but they were clearly disappointing for Shell.”
Including adjustments, Shell’s CCS result was lower still at $2.4 billion, mainly due to a $2.2 billion charge for liquids-rich shale properties in North America “reflecting the latest insights from exploration and appraisal drilling results and production information”.
Shell’s results came in the same week as disappointing results from rival BP and on the same day as smaller Italian group was forced to cut its output target - partly because of Nigerian troubles.