Shell Net Falls 62%, Sees No Quick Recovery

Updated from 3:29 a.m. EDT

AMSTERDAM (TheStreet) -- Europe's largest oil company Royal Dutch Shell (RDS.A Quote) said third-quarter earnings fell 62% to $3.25 billion from $8.45 billion, adding it isn't expecting a quick recovery.

"Our third quarter results were affected by the weak global economy. Upstream and ownstream profitability has been sharply reduced compared to year-ago levels," said CEO Peter Voser, in a statement Thursday. "We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery."

Sales in the quarter fell 43% to $75 billion.

Shell said its program to improve its competitive cost position will be completed by the end of the year, and 5,000 employees will be eliminated. Shell said it reduced operating costs by about $1 billion in the first nine months of 2009 from a year earlier.

Shell's production was flat from a year ago at 2.93 million barrels of oil a day, and up slightly from the second quarter. Shell is investing heavily in new production to reverse a decade-long declining trend, and has vowed to make production increases by next year.

Shell's earnings from production fell 82% to $1.54 billion, reflecting a fall in the price of oil.

Refining earnings fell 47% to $1.29 billion, including a gain of $536 million because of a rise in the estimated value of inventories. Shell said refining margins worsened because of lower demand.

Shell rival BP(BP Quote) earlier this week reported third-quarter earnings fell 34% on lower oil prices, but the results were ahead of forecasts as it controlled costs and improved upstream production volumes.

-- Reported by Joseph Woelfel in New York .

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