(Bloomberg) -- Royal Dutch Shell (LON:RDSa) Plc’s first-quarter earnings beat even the highest analyst estimate as its natural gas business led a strong company-wide performance.
Shell gives a strong ending to an otherwise mixed Big Oil earnings season, which showed companies mostly recovering from a worst-in-a-generation downturn but unable to fully insulate themselves against volatile markets. While BP (LON:BP) Plc, Chevron Corp. (NYSE:CVX) and Total SA (PA:TOTF) mostly hit their earnings targets on a mixture of rising output and cost cuts, Exxon Mobil Corp (NYSE:XOM). suffered a “shocker” due to its worst refining performance in nearly 20 years.
“Shell has made a strong start to 2019,” Chief Executive Officer Ben Van Beurden said in a statement on Thursday. “The consistent financial performance across all our businesses provides confidence in meeting our 2020 outlook.”
The Anglo-Dutch company said adjusted net income was $5.3 billion in the first quarter, well ahead of the average analyst estimate of $4.52 billion. That’s 2 percent down from a year earlier, reflecting weaker refining margins and lower crude prices.
Shell is far more focused on natural gas than its peers, accounting for about 25 percent of all the world’s traded liquefied natural gas volumes annually. The unit’s profit of $2.57 billion was 24 percent higher than analysts’ estimates, the largest outperformance of any unit.
Cash flow from operations, excluding working capital movements and the effect of accounting-rule changes, rose to $11.3 billion from $10.4 billion a year earlier. Total oil and gas output decreased 2 percent to 3.752 million barrels of oil equivalent a day.
In the quarter, Shell started up the production vessel offshore Brazil called Lula North and shipped some of its first cargoes from the Prelude LNG project in Australia.
Shell replaced only half its reserves last year, prompting questions about whether the company will use acquisitions to bulk up its portfolio. In January, Van Beurden said the company’s portfolio in the prolific Permian shale basin was “a bit small,” leading to speculation about an acquisition there.
Despite talks with Endeavor Energy Resources LP earlier this year, Shell so far hasn’t jumped into the region’s growing deals frenzy that has culminated recently in the fight between Chevron and Occidental Petroleum Corp (NYSE:OXY). over Anadarko Petroleum Corp (NYSE:APC).
Investors are also keeping a close eye on details of share buybacks. Shell is now in the third tranche of its planned repurchase of $25 billion of stock before 2021. The company has bought back $6.75 billion of shares so far, and will repurchase as much as $2.75 billion in addition by July 29.