Royal Dutch Shell (RDSA) delivers a superb first quarter

Amid weakening market prices for oil and gas, Royal Dutch Shell clocked an impressive quarter, generating plenty of cash and buying back sizable amounts of stock.

Key highlights of the earnings report include: revenue at $85.66 billion compared to $91.11 billion in the same quarter a year ago and $104.6 billion in the last quarter of 2018; net income at $6.00 billion compared to $5.90 billion in the same quarter a year ago and $5.59 billion in the last quarter of 2018; earnings per ADS at $1.48 compared to $1.42 in the same quarter a year ago and $1.36 in the last quarter of 2018; and finally, operating cash flow at $8.63 billion compared to $9.47 billion in the same quarter a year ago and $22.0 billion in the last quarter of 2018.

The segments that performed best in the quarter were oil products and chemicals segments. Additionally, since much of Shell’s refining business is outside North America where refining margins are some of the weakest currently, the company suffered reasonably less.

Other highlights of the quarter include an average of 3.75 million barrels for the total production of the quarter, and two more significant divestments-its interest in the Saudi Arabia Refining Limited's joint venture in Jubail, Saudi Arabia, and its nonworking interest in the Caesar-Tonga offshore project in the Gulf of Mexico to Delek with a total asset sales of $1.59 million, another significant oil discovery at its Blacktip prospect in the Gulf of Mexico, three renewable energy business acquisitions, and increase in the net to debt capital to 26.5%, and finally buyback shares amounting to $25 billion by the end of 2020.  

Currently, the company is more focussed on extracting value out of business with operational improvements and asset sales than business growth itself. As of today, Shell has production capacity of about 650,000 barrels of oil equivalent per day and 5.6 million tons per year of LNG, as well as 1.5 million tons of new chemical production facilities.