Shell disappointed markets and its own chief executive with weak refining and downstream results on Thursday, as an oil price fuelled rebound in its fourth-quarter profit fell short of expectations. Shell's mixed results lagged stronger earnings from Chevron and Exxon Mobil, but nevertheless outpaced rival BP, which is still struggling to put the costs of the Gulf of Mexico oil spill behind it.
Shares in the Anglo-Dutch oil major fell 3.7 percent, with analysts saying they had expected more and expressing concern over continued weakness in Shell's refining business, where several major facilities were down for long periods. Chief financial officer Simon Henry said a major unit of Europe's largest refinery in the Netherlands remained shut and would not restart until at least the end of February, which would have an impact on first-quarter results.
Shell blamed weak refining margins, volatile downstream marketing margins as a result of rising oil prices and pressure on natural gas prices in some regions for the patchy results. "I am not satisfied with the fourth-quarter results," Chief Executive Officer Peter Voser said on a call with reporters.
There is no immediate sign that things are going to improve in refining, where Shell is trying to sell several plants, while some analysts are concerned by the company's focus on gas given price weakness and oversupply forecasts. Benchmark US crude prices averaged about $85 per barrel in the fourth quarter, up from $76 in the fourth quarter of 2009, but have since risen to above $100. Shell's earnings on a current cost of supplies (CCS) basis, jumped to $5.7 billion from $1.2 billion a year ago when it suffered heavy refining losses, although analysts said this was still less than expected.
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