Updated from 2:37 a.m. EDT
) -- Europe's largest oil company
Royal Dutch Shell
said second-quarter earnings fell 67% to $3.8 billion from $11.56 billion a year earlier as oil prices fell and energy demand remained weak.
"Conditions are likely to remain challenging for some time, and we are not banking on a quick recovery," said CEO Peter Voser, in a statement Thursday. "Shell is adapting to this new situation, and we must do more. We are sharpening our focus on delivery and affordability."
Sales in the quarter were $63.9 billion, down from $131.4 billion a year earlier.
Shell said it would reduce capital spending in 2010 to $28 billion, from an expected $31 billion in the current year.
Cash flow in the second quarter was $900 million compared with $4.2 billion in the same period a year earlier.
The company announced a second-quarter dividend of 42 cents a share, up 5% from a year earlier.
, Europe's second-largest oil company, said second-quarter earnings fell 53% to $4.39 billion from $9.36 billion a year earlier when oil prices were much higher.
At Shell's exploration and production arm, earnings fell 77% to $1.33 billion. Production was down 6% to 2.9 million barrels of oil and equivalents per day, while prices realized by the company were $52.62 a barrel, from $111.92 a year earlier.
"The industry outlook remains a challenging one, despite the rally in oil prices" from their winter lows, Voser said. In the first quarter of 2009, the company's average selling price was $42.16 a barrel.
At Shell's refining arm, earnings were down 74% to $1.16 billion, mostly because of the lower value of inventories. Stripping out the impact of price changes in both years, the division would have posted a loss of $255 million, vs. profit of $1.08 billion, due to lower refinery intake, worse margins, and higher pension charges.
-- Written by Joseph Woelfel in New York
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