Profits at Royal Dutch-Shell, BP Decline

Royal Dutch-Shell and British Petroleum on Thursday both reported sharply lower earnings for the first quarter, blaming the global slump in crude oil prices. Pennzoil, in a statement revised to comply with a federal ruling, said its previously announced profit was a loss.

Royal Dutch-Shell said its profit fell 16.6%, while British Petroleum announced a 96% drop.

Royal Dutch-Shell, which has headquarters in London and the Netherlands, said its net income for the first quarter was $1 billion, down from $1.2 billion in the first quarter of 1985.

London-based British Petroleum said its January-March profit was $32 million, compared to $577 million in the first quarter last year.

Pennzoil, based in Houston, said it lost $16.1 million in the first quarter, compared to a gain of $57.4 million a year earlier. Pennzoil had originally reported a first-quarter profit of $42.3 million.

The downward revision resulted from the Securities and Exchange Commission’s May 6 rejection of a proposal that would have permitted oil companies to defer writedowns on oil and gas property costs until Dec. 31, 1986, based on the expectation that oil prices would improve by then, Pennzoil Chairman J. Hugh Liedtke said.

Both Royal Dutch-Shell and British Petroleum report their earnings in pounds and sell their petroleum in dollars. The two companies said pound-to-dollar conversions were based on average conversion rates of $1.44 for 1 pound in the first quarter of 1985 and $1.12 for 1 pound in the 1986 quarter.

Royal Dutch-Shell’s total revenue was $22 billion in the latest quarter, down from $22.4 billion a year earlier.

British Petroleum owns 55.5% of Cleveland-based Standard Oil. Standard Oil’s share of the company’s earnings was $474 million, down from $726 million a year earlier, BP said.

BP’s revenue totaled $12.2 billion, compared to $12.9 billion in the first quarter of 1985.