Despite beating expectations with its first quarter results Anglo-Dutch oil major Royal Dutch Shell (RDSB) is in retreat – down 0.5% at £17.53 amid choppy oil prices and a market in risk-off mode.

Underlying earnings fall 58% year-on-year to $1.55 billion but this was materially better than the $1 billion pencilled in by analysts. The prized dividend is maintained at 47 cents per share.

Spending plans are scaled back from previous guidance of $33 billion to $30 billion – around 36% lower than the acquired BG and Shell spent combined in 2014 but still significantly more than many of its peers.

BP (BP.) plans to spend between $15 billion and $17 billion and US giant ExxonMobil (XOM:NYSE) has allocated $23.2 billion to its capex budget.

In the long-term Shell may benefit from spending more at this point in the cycle, assuming its balance sheet can take the strain, with drastically reduced costs improving the economics of projects in the future.

The company had good news on the BG acquisition with the integration ‘off to a good start’ according to chief executive Ben van Beurden. This means ‘accelerated delivery of synergies’ at ‘lower cost’ says the Dutchman.

Reflecting the deal, which makes it the world’s top liquefied natural gas (LNG) producer, Shell says it sold 12.29 million tonnes of LNG in the first quarter, up 25% year-on-year. Shell's overall oil and gas output is up 16%.

Issue Date: 04 May 2016