Shell spooks with earnings miss and cautious outlook

- Q3 earnings down 32 per cent- 'Headwinds' in near term- Pledge to increase the pace of asset salesEarnings declined more than expected at Royal Dutch Shell due to weaker refinery conditions, higher costs and lower volumes. Chief Executive Officer Peter Voser said headwinds that continued to "erode the near term outlook" included weak industry refining margins and security issues in Nigeria but pointed to a strong flow of new projects and said Shell would increase the pace of asset sales.With both Upstream and Downstream business contributing lower numbers than the same period last year, earnings for the third quarter tumbled 31.8% to $4.5bn.Shell said Upstream operating expenses and exploration expenses had increased, on top of lower production volume due to general maintenance and asset replacement.Earnings also reflected the impact of the challenging operating environment in Nigeria due to security issues and lower dividends from an liquid natural gas (LNG) venture, which were only partly offset by higher contributions from the chemicals business and increased underlying upstream production volumes led by integrated gas.Cash flow improved year-on-year to from $9.5bn to $10.4bn and Shell treated investors to a 5% increase in the dividend to $0.45 per share.Shell reported a strong project flow in place for 2014 and beyond to help boost cash flow with the start-up of a series of new oil and gas fields in the last few months in including Parque das Conchas, Kashagan and Majnoo. As well as "increasing the pace" of asset sales, Voser said this new project flow and a reduction in net spending next year would drive cash flow in 2014 and beyond - but that some hard choices lay ahead. "The company is rich with new investment opportunities - in the next few quarters Shell's capital discipline means we will need to make hard choices between the best new investment opportunities from this industry-leading portfolio." Gearing rose to 11.2% at the end of the quarter versus 9.1% at the end of the same period in 2012.Shares tumbled 4% in early trading to to 2097.5p at 08:06.OH