Results from oil major Royal Dutch Shell gave the UK-listed oil and gas sector a significant boost on Thursday, as the biggest constituent in the category smashed analysts' estimates with its second-quarter profits.
Shell, which has a market cap of around £156bn at current prices, said that earnings on a current cost of supplies basis surged to $5.1bn in the three months to 30 June, up from $2.4bn the year before, helped by higher liquids production volumes and prices.
A strengthening Australian dollar
on a deferred tax liability and higher contributions from manufacturing were also behind the better bottom line, Shell said.
Excluding so-called "identified items", second-quarter earnings totalled $6.1bn, 33% up from $4.6bn the year before and well ahead of the consensus estimate of $5.46bn.
Analysts Richard Griffith and Alex Brooks from Canaccord Genuity said: "RDS has promised enhanced financial performance and these results give an early stage indication of the group's potential when all aspects of the operations are performing."
were up 3% at 2,455p in afternoon trade on Thursday, along with the second-largest UK-listed oil stock, BP, whose shares were recovering after selling pressure earlier in the week.
BP's stock fell on Tuesday despite a better-than-expected set of second-quarter results after the company showed concerns about the potential impact from Russian sanctions on business.
Natural gas group BG Group was also in demand after lifted its interim by a tenth after a strong second quarter led to a 9% increase in earnings per share (EPS) in the first half.
So-called 'business performance' EPS, which excludes disposals, certain re-measurements, impairments and other exceptionals, totalled 35.5 cents in the second quarter, up 22% year-on-year. This was a strong turnaround from the 3% decline registered in the first quarter and helped first-half business performance EPS improve by 9% to 69.3 cents.
Others in the sector were also performing well on Thursday, including Faroe Petroleum, Rockhopper Exploration and Egdon Resources.
However, Afren was bucking the trend with shares plummeting 26% after the suspension of its chief executive officer (CEO) and chief operating officer (COO).
The oil explorer said on Thursday that CEO Osman Shahenshah and COO Shahid Ullah have both been temporarily suspended pending the result of an investigation related to "unauthorised payments" potentially for the benefit of the directors.
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