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Shell posts strong recovery, after a dismal 2016

The company is shedding assets and retooling following the mega-merger with British energy company BG Group.

By
Daniel J. Graeber
Discipline still needed, even after a strong recovery in net profit for the second quarter, Shell CEO Ben van Beurden said Thursday.
Discipline still needed, even after a strong recovery in net profit for the second quarter, Shell CEO Ben van Beurden said Thursday.

July 27 (UPI) -- Royal Dutch Shell said Thursday its profits for the second quarter were three times higher than last year, but stressed market conditions warranted discipline.

The Dutch supermajor, trimmed down after a merger last year with British energy company BG Group, reported a strong rebound so far in 2017, after turning in one of its weakest performances in more than a decade last year.

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Realizing an average price for crude oil of just under $50 per barrel, after last year's drop below $30 per barrel, CEO Ben van Beurden said struggles last year have paid off in 2017.

"Shell's strong results this quarter show that we are reshaping the company following the integration of BG," he said in a statement.

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Net profit for the second quarter was $3.6 billion, up from the $1 billion reported for the second quarter 2016. From the first quarter, however, net profit is down about 4 percent. The price for Brent crude oil was near $51 per barrel early Thursday, up about 18 percent from this date last year, but down nearly 10 percent from the peak for 2017.

"The external price environment and energy sector developments mean we will remain very disciplined, with an absolute focus on the four levers within our control, namely capital efficiency, costs, new project delivery, and divestments," van Buerden said. "I am confident that we are on track to deliver a world-class investment to our shareholders."

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In mid-July, the company said the $1.23 billion gained from leaving parts of the Irish energy sector puts Shell past the halfway point for its total divestment goal. In March, it took $587 for the sale of asset in Gabon and took $250 million for the sale of its aviation subsidiary in Australia in May

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Total divestments for the first half of the year were $9.5 billion, compared with $1.5 billion last year. Operating expenses, meanwhile, were down 13 percent from last year at $18.8 billion for the first half of 2017.

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