Refining and trading cushioned a drop in Royal Dutch Shell's first quarter profits. As David Pollard reports, they fell less than expected after the collapse in oil prices decimated earnings from oil and gas output.
Another oil major, another major dent to profits. But like the others, not as big as feared. Shell's first quarter net income came in at 3.2 billion dollars - that's 56 per cent down but still some way above the 2.4 billion forecast. And - as with BP and Total who reported this week - refining and trading provided a cushion. So called 'downstream' profits rose to 2.6 billion - a full billion up on a year ago. Other stand out points: capital expenditure's being scaled back from 35 to 33 billion dollars this year. But there were few details on further asset sales. Fat Prophet's Sarbjit Chahal. SOUNDBITE: SARBJIT CHAHAL, SENIOR EQUITIES ANALYST, FAT PROPHET, SAYING (English): "BP has been in a position of cost-cutting, of selling assets on, since 2010, since the Deepwater Horizon oil spill. That's not the case for Shell. They have some of these oil refineries still on their books - that should now come into focus for them to say 'are we going to now look to to sell some parts of the business?''' Shell also appeared to rule out any more mega-deals - resources for those running low. Its 70 billion dollar union with rival BG is the biggest oil merger of the past decade. And has fuelled expectation of a wave of consolidation in the sector. Investors might have to wait. SOUNDBITE: SARBJIT CHAHAL, SENIOR EQUITIES ANALYST, FAT PROPHET, SAYING (English): ''If you're listening to pretty much every CEO of an oil major at the moment that's talking, there is no real need to carry out any consolidation or look to buy out any companies." But Europe's biggest oil company is attractive, says Chahal - as is the sector. SOUNDBITE: SARBJIT CHAHAL, SENIOR EQUITIES ANALYST, FAT PROPHET, SAYING (English): ''This is an opportunity to buy into oil when it's at historic low prices. That's effectively why Shell have had the takeover of BG - they're trying to do it from a strategic position of buying when the oil price is at its lowest. And we should mimic that.'' As for now, Shell is keeping investors on board by maintaining a dividend of 47 cents per share.