Financial Post / Shell Canada's Gains Offset Low Oil Prices
Shell Canada Ltd. mitigated the impact of low oil prices in the second quarter with the sale and leaseback of its corporate headquarters and by buying tax losses from an affiliated company.
The integrated oil and gas producer said yesterday earnings for the three months ended June 30 were $126 million (43› a share), up 14% from $111 million (33›) last year, including a $32-million gain from the real estate sale.
"We are pleased we were able to sustain our earnings and investment program during a period when the prices of many of our commodity products declined," said president and chief executive Chuck Wilson.
Shell shares (SHC/TSE) closed yesterday at $26.25, down 50›.
Cash flow was $186 million for the period, down from $209 million a year ago.
Earnings from Shell's resources group were down to $33 million from $47 million, while the company's products division contributed $65 million, down from $72 million.
Production volumes were softer because of asset sales and this spring's forest fires in Alberta, which forced the company to temporarily shut in some oil production.
Natural gas production for the period was 580 million cubic feet a day, down from 626 million a year ago. Oil production was 22,400 barrels a day, down from 27,400.
The company said it was able to reduce its tax expenses by acquiring business losses from an unidentified related company.
The reduction will continue for the rest of the year and is expected to offset corporate expenses for the period, Shell said.
The value of the business losses was not disclosed.
Earlier this year, the company became the owner of its downtown Calgary office building, which it had leased for 20 years, after exercising an option to buy. It then sold it for $142 million in a deal that closed June 1.
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