Business and Finance NEWS

After Higher profit, Peter Voser to be next CEO of Royal Dutch Shell plc

By Amarendra Bhushan for CEOWORLD Magazine Updated:October 30, 2008 Become a writer!

The Board of Royal Dutch Shell plc today announced that Peter Voser will succeed Jeroen van der Veer as Chief Executive, effective 1 July 2009. Voser (50) is Chief Financial Officer and a Director of the Board since October 2004.

“I am delighted to announce Peter Voser as the next Chief Executive of Royal Dutch Shell,” said RDS plc Chairman Jorma Ollila. “Peter has the experience, qualities and personal leadership to drive Shell forward, building on the strong position established by Jeroen van der Veer.” “Voser’s selection came after a comprehensive assessment and review of internal and external candidates led by the Board Nomination and Succession Committee,” Ollila added.

Voser joined the Royal Dutch/Shell Group of Companies in 1982 and has held a number of finance and business roles in Switzerland, Argentina, Chile and the UK until March 2002. He then joined Asea Brown Boveri (ABB) Ltd as Chief Financial Officer, returning to Shell four years ago.

Voser, a Swiss citizen, was born in Baden, Switzerland. He is married and has three children. Voser graduated in business administration from the University of Applied Sciences, Zurich, Switzerland, in 1982.

Royal Dutch Shell Plc has reported a 71% jump in its third-quarter profits, helped by record high oil prices earlier this year. Shell earned $10.9bn (£6.6bn) between July and September – up from $6.4bn a year earlier. Crude oil prices reached a record of $147 a barrel in July, but have since fallen back sharply. Earlier this week, rival BP reported that its profits during the same period had more than doubled to $10bn.

Asset sales: Shell said its third-quarter profits – on a current cost of supply basis which strips out fluctuations in prices – were boosted by both record oil prices and asset sales, which outweighed a slight drop in oil and gas production. Chief executive Jeroen van der Veer said: “We are watching the world economic situation closely. Shell is robust across a wide range of energy prices.” He added: “Our strategy remains to pay competitive and pay progressive dividends, and to make significant investments in the company for future profitability.”

The news, which is likely to spark fresh calls in the UK, came just days after BP posted a similar set of bumper quarterly profits. Referring to the recent falls in crude oil prices, Chancellor Alistair Darling said he wanted to see the reductions passed on to the consumer.

Production falls: “I want the oil companies to pass on these reductions to the pumps as soon as possible, because people are entitled to see the benefits,” he said. The third-quarter $10.9bn profit included a one-off gain of $2.06bn, which came mainly from the sale of Shell’s German gas network, BEB Erdgas und Erdoel. Shell said its oil and gas production fell because of the impact of hurricanes in the Gulf of Mexico, a lack of new fields starting up, and production-sharing contracts under which it receives less oil from projects when prices rise. On Wednesday Shell said its chief financial officer, Peter Voser, would replace Mr van der Veer when he retires next July. The appointment of Mr Voser, who is Swiss, will be the first time that Shell, which has dual headquarters in London and The Hague, would be led by somebody who is not either Dutch or British.

Royal Dutch Shell’s third quarter 2008 earnings, on a current cost of supplies (CCS) basis, were $10.9 billion compared to $6.4 billion a year ago. Basic CCS earnings per share increased by 74% versus the same quarter a year ago.

Cash flow from operating activities for the third quarter 2008, excluding net working capital movements, was $10.4 billion. Net capital investment for the quarter was $11.2 billion. Total distribution to shareholders, in the form of dividends and share repurchases, was $3.1 billion and gearing was 15.4% at the end of the third quarter.

The sale of the BEB Erdgas und Erdoel GmbH (Shell share 50%) gas transport business in Germany was closed, increasing the third quarter 2008 earnings by some $1.4 billion.

A third quarter 2008 dividend has been announced of $0.40 per share, an increase of 11% over the US dollar dividend for the same period in 2007.

Royal Dutch Shell Chief Executive Jeroen van der Veer commented: “We delivered satisfactory earnings and operating performance in the third quarter of 2008. We are watching the world economic situation closely. Shell is robust across a wide range of energy prices. Our strategy remains to pay competitive and progressive dividends, and to make significant investments in the company for future profitability.”

KEY FEATURES OF THE THIRD QUARTER 2008

Third quarter 2008 CCS earnings were $10,903 million or 71% higher than in the same quarter a year ago.

Third quarter 2008 reported income was $8,448 million or 22% higher than in the same quarter a year ago.

Oil Products earnings reflected some $400 million of non-cash gains related to fair value accounting of commodity derivatives. In addition Gas & Power earnings reflected non-cash gains of some $400 million related to fair value accounting of commodity derivatives associated with long-term contracts (see Note 8).

Basic CCS earnings per share increased by 74% versus the same quarter a year ago.

Total cash returned to shareholders in the form of dividends and share repurchases in the third quarter 2008 was $3.1 billion.

Cash flow from operating activities, excluding net working capital movements, was $10.4 billion compared to $9.9 billion for the same quarter last year. Including net working capital movements, cash flow from operating activities was $12.6 billion compared to $9.1 billion in the third quarter 2007.

Capital investment for the third quarter 2008 was $13.2 billion, including an amount of $5.0 billion related to the acquisition of Duvernay Oil Corp. (“Duvernay”). Net capital investment (capital investment, less divestment proceeds) for the third quarter 2008 was $11.2 billion.

Return on average capital employed (ROACE), on a reported income basis (see Note 3), was 26.3%.

Gearing (see Note 5) was 15.4% at the end of the third quarter 2008 versus 12.1% at the end of the third quarter 2007.

Oil and gas production, including oil sands bitumen production, for the third quarter 2008 was 2,931 thousand barrels of oil equivalent per day (boe/d), compared to 3,137 thousand boe/d in the same quarter last year. Production when compared to the third quarter 2007 was reduced by some 120 thousand boe/d due to hurricane impacts in the Gulf of Mexico, USA and a planned maintenance turnaround in the UK North Sea related to the shutdown of the St. Fergus gas processing facilities. Excluding these factors and the impact of divestments and production sharing contracts (PSC) pricing effects, production was 1% lower than the same quarter last year.

Liquefied Natural Gas (LNG) sales volumes of 3.10 million tonnes were 6% lower than in the same quarter a year ago.

Oil Products refinery availability was 88%, compared to 93% in the third quarter 2007. Chemicals manufacturing plant availability was 86%, 8% lower than in the third quarter 2007. Oil Products and Chemicals availability was significantly impacted by the hurricanes in the USA. Oil Sands upgrader availability was 96%, 6% higher than in the same quarter last year.

Oil Products marketing sales volumes in the third quarter 2008 decreased by 3% compared to the same quarter last year, and, excluding the impact of divestments, were in line with the same quarter last year. Chemical product sales volumes decreased by 13% compared to the third quarter 2007.