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AMSTERDAM and NEW YORK -- Royal Dutch Shell plc reported a 62-percent drop in first-quarter net profit yesterday as oil prices fell, while Hess Corp. reported a net loss of $59 million.
Shell's net profit figure of $3.49 billion compares with $9.08 billion in the same period a year ago. Sales fell 49 percent to $58.2 billion, according to an Associated Press report.
"Conditions deteriorated further in the first quarter of '09 following a downturn across Q4," Shell's CFO Peter Voser said on a conference call.
Business "has continued to be under pressure so far in the second quarter," he said. "This is a very difficult condition for the oil industry, and we need to be clear about it."
The oil company's production arm reported a 67 percent fall in earnings to $1.7 billion. Both oil production and sales prices fell. Its refining arm saw earnings drop to $1.40 billion, down from $2.37 billion a year earlier, which analysts said was better than expected, according to the report.
Shell pumped 3.5 percent fewer barrels of oil, 3.32 million barrels and equivalents per day, due to quota restrictions by OPEC and attacks on its facilities in Nigeria, the company said. Shell's average selling price per barrel in the quarter was $42.16, down from $90.72 a year ago.
The company plans $31 billion in investments in 2009, compared with $20 billion by close rival BP plc of Britain.
Voser said Wednesday the company has no plans to reduce spending; Shell has 1 million barrels per day of oil under development.
Meanwhile, in the United States, Hess reported a first-quarter net loss of $59 million, compared with net income of $759 million in first quarter 2008. It's oil and gas production of 390,000 barrels of oil equivalent per day was down slightly, compared to 391,000 in first quarter 2008. The oil company lowered its capital and exploratory expenditures to $805 million, down from $970 million in first quarter 2008.
Hess' marketing and refining earnings were $102 million in the first quarter of 2009, an increase of $86 million from 2008, primarily reflecting higher energy marketing margins and improved trading results. Refining operations generated a loss of $18 million in the quarter, compared with a loss of $3 million in the first quarter of 2008, reflecting lower refining margins.
Marketing earnings were $101 million in the first quarter of 2009, an increase of $69 million from the first quarter of 2008. Trading activities produced a gain of $19 million in the first quarter of 2009, an increase of $32 million from the first quarter of 2008.
Hess' exploration and production generated a loss of $64 million in the first quarter, compared with income of $824 million the year before. In the first quarter of 2009, the corporation’s average worldwide crude oil selling price, including the effect of hedging, was $34.42 per barrel, compared with $83.28 per barrel in the first quarter of 2008.
As of March 31, cash and cash equivalents totaled $1.157 billion, compared with $908 million at Dec. 31, 2008. Total debt was $4,328 million, compared to $3,955 million at the end of 2008.
In February of 2009, the corporation completed a $1.25 billion debt offering. Hess's debt-to-capitalization ratio at the end of the first quarter was 26.3 percent, compared to 24.2 percent at the end of 2008.
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