Shell Posts Sharp Drop in Net

Royal Dutch Shell PLC posted a 67% fall in net profit for the 2nd-Q, as falling production exacerbated effects of lower oil & gas prices. "Energy demand is weak. There is excess capacity in the market and industry costs remain high," said CEO Peter Voser. He added it not banking on a quick recovery in the global economy. "Shell is adapting to this new situation, & we must do more. We are sharpening our focus on delivery & affordability." The Anglo-Dutch energy company's restructuring program already eliminated 20% of sr. mgmt. positions & substantial further cuts are likely, it said. Cash costs in the first half were cut $700M, which would be closer to $2B if foreign exchange effects are taken into account. Net profit in the 3 mos ended June 30 fell to $3.82B from $11.56B. Revenue fell 51% to $63.88B from $131.42B. Total oil & gas production fell 5.3% to 2.96M barrels of oil equivalent a day due to low natural-gas demand in many industrialized economies & continuing violent disruption to operations in Nigeria. Analysts expected a production drop of 4.2%. "Production volumes were even lower than forecast. Crude production was down 8% & gas 2% year-on year. This is the lowest for well over 12 yrs," said NCB analyst Peter Hutton said. Rival BP PLC's production rose 4.6% in the 2nd-Q. The energy co's clean current cost of supplies, closely watched after-tax figure that strips out gains or loss from inventories & other items, fell 63% to $3.15B from $8.58. Analysts considered adjusted figure a better performance measure because it excludes the often-volatile value of oil inventories.