Shell beats expectations on refining boost

Profits from refining offsetting sharp drop in oil and gas production earnings

Royal Dutch Shell on Thursday reported a lower than expected 56% drop in first quarter net income at $3.2 billion, as refining and trading profits offset a decline in earnings from oil and gas output.

Shell maintained a dividend of 47 cents per share and said it would use its planned $70 billion acquisition of smaller British rival BG Group to further optimise its asset base.

Profits from refining and trading rose to $2.65 billion in the first quarter of 2015 from $1.575 billion a year earlier, offsetting a sharp drop in oil and gas production earnings to $675 million from $5.7 billion.

"Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices," Chief Executive Officer Ben van Beurden said.

Shell has sold $2 billion worth of assets so far this year as part of its drive to keep only its most profitable assets, it said.

In January, Shell announced a three-year, $15 billion cut in spending to help it weather the plunge in oil prices.

Van Beurden then warned against over reacting to the recent oil price fall.

Oil majors have slashed 2015 upstream budgets by 10 to 15% on average in recent months.

BP and Total kicked off the sector's quarterly results season on Tuesday with higher than expected profits thanks to steep increases in profits from refining, showing the resilience of global oil firms in the face of slumping oil prices.

Benchmark Brent prices averaged $55 a barrel in the first quarter of 2015, almost half the level of a year ago.