This article has been adapted from Fool U.K., our sister site across the pond.
For many years, Royal Dutch Shell
Shell does well
Thursday morning, the UK's largest listed company (with a market value of 145 billion pounds) unveiled underlying profits on a current cost of supplies (CCS) basis, and after stripping out one-off items, of $6.3 billion. This was 30% ahead of the previous year and slightly above analysts' forecasts.
On the same CCS basis, Shell's adjusted earnings per share rose 29% to $1.02. Shell's surging profitability was largely due to higher refining margins, thanks to the oil price spiking upward this year. Today, a barrel of Brent crude trades at over $125, up 45% on a year ago.
However, the Anglo-Dutch oil supermajor's output of oil and gas fell 3% year on year, slipping to 3.5 million barrels of oil equivalent per day. This was largely due to Shell's ongoing program of disposing of non-core assets, which raised $3.2 billion between January and March.
Big oil
It's hard to put across just how huge Shell is. That said, its first-quarter revenue was just short of $110 billion, which means that only U.S. rival ExxonMobil
As you'd expect, the FTSE 100's biggest firm throws off huge sums in cash. In its first quarter, cash flow from operating activities soared 26% to $13.1 billion, excluding movements in working capital.
This wave of cash enables Shell to drive down its borrowing. Shell's net debt has fallen to $26 billion, which has reduced its gearing to 14%, versus 17.1% a year ago.
Valuation
Europe's largest oil company declared a quarterly dividend of $0.42 per share, unchanged from a year ago. Shell's shares go ex-dividend on May 11, with the dividend paid on June 27.
At this level, Shell shares trade on a historic price-to-earnings ratio of 11.6 and yield a tasty 4.6%, covered 1.9 times.
To me, Shell's shares are a safer bet than those of its British rival BP
In short, I'd be more than happy to own a chunk of this oil behemoth!
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