The earnings reflecting lower realized oil, LNG, and natural gas prices, as well as weaker realized refining and chemicals margins. This was partly offset by stronger contributions from LNG and oil products trading and optimization, as well as higher realized margins in retail and global commercial.
Compared with the third quarter 2018, cash flow from operating activities excluding working capital movements was $12.1 billion, reflecting lower earnings, higher pension contributions, and lower dividends received.
“This quarter we continued to deliver strong cash flow and earnings, despite sustained lower oil and gas prices, and chemicals margins,” said Ben van Beurden, Shell chief executive officer. “Our earnings reflect the resilience of our market-facing businesses and their ability to capitalize on market conditions, including very strong trading and optimization results this quarter. Our intention to buy back $25 billion in shares and reduce net debt remains unchanged. The prevailing weak macroeconomic conditions and challenging outlook inevitably create uncertainty about the pace of reducing gearing to 25% and completing the share buyback program within the 2020 timeframe.”
Earnings excluding identified items in the upstream segment were $907 million for the quarter. Identified items primarily reflected a gain on sale of assets of $1.5 million, partly offset by impairments of $344 million and a charge of $261 million related to the impact of the weakening Brazilian real on a deferred tax position. Compared with third-quarter 2018, upstream earnings excluding identified items reflected lower realized oil, gas and NGL prices, well write-offs in Kazakhstan as well as lower gas production. These were partly offset by lower provisions, as well as positive movements in deferred tax positions in contrast with the same period a year ago.
Integrated gas earnings excluding identified items were $2.7 million for the quarter. Third quarter identified items primarily reflected losses related to the fair value accounting of commodity derivatives. Compared with third-quarter 2018, the earnings excluding identified items primarily reflected stronger contributions from LNG trading and optimization as well as higher volumes, partly offset by lower realized LNG, oil and gas prices. Compared with third-quarter 2018, production increased mainly due to field ramp-ups in Australia and Trinidad and Tobago. LNG liquefaction volumes increased mainly as a result of new LNG capacity from the Prelude floating LNG facility as well as increased feed gas availability compared with third-quarter 2018.
Earnings excluding identified items in the downstream segment were $2.2 billion for the quarter. Third quarter identified items primarily reflected a gain on sale of assets of $282 million and a gain of $192 million related to the fair value accounting of commodity derivatives, partly offset by a net charge of $52 million related to impairments. Compared with third-quarter 2018, downstream earnings excluding identified items benefited from stronger contributions from oil products trading and optimization and higher retail and global commercial margins. These were partly offset by lower realized refining, base chemicals and intermediates margins.
Source: ogj
