Royal Dutch Shell PLC said Monday Chief Executive Peter Voser will step down in early 2014, and the company reported lower first-quarter profits in the wake of a decline in oil prices.
The departure comes as a surprise, as Voser is just 54 years old and is well-regarded within the industry. Shell broke with a longstanding tradition of alternating British and Dutch chief executives with the July 2009 appointment of Voser, a Swiss national.
"I feel it is time for a change in my lifestyle and I am looking forward to have more time available for my family and private life," Voser said in a note to staff. Voser has been at Shell for 25 years, including five years as CFO and four as CEO.
He added that he plans to serve in non-executive business positions outside Shell.
Since taking Shell's top job, Voser has invested heavily in production, much of which is just starting to come online. In particular he has focused on expanding the company's presence in liquefied natural gas, or LNG, which can be transported without pipelines.
The company also became Europe's largest oil company by market capitalization on his watch, as major rival BP PLC struggled to recover after its massive 2010 oil spill in the Gulf of Mexico. Among independent oil companies globally, only ExxonMobil is larger.
Chairman Jorma Ollila praised Voser for "reorganizing the company, delivering growth, and developing a clear forward strategy with a strong portfolio of new options."
He said a search for a new CEO is underway, with candidates inside and outside the company under consideration.
"The search for a replacement CEO will be an unwelcome distraction," said analyst Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, who rates shares a hold.
The surprise announcement came as Shell said its net profit fell to $8.18 billion from $8.74 billion in the first quarter of 2012. Revenues fell 5.1 percent to $112 billion.
Stripping out the impact of oil price fluctuations and asset sales, underlying earnings grew 2 percent, the company said in a statement.
Shell produced 3.56 million barrels of oil per day, fractionally higher than 3.55 million a year ago. Shell said core production is growing, but some of its capacity in Nigeria is closed due to security threats.
Production earnings fell 10 percent to $5.65 billion due to lower oil prices. The company's refining arm profits rose 28 percent to $1.69 billion amid better margins.
Hargreaves Lansdown's Hunter said the company's earnings were better than expected, but highlighted that Shell is playing a "long game" by investing heavily in infrastructure to increase earnings over time.
He said Shell has an "extensive project plan...to underpin future production across several energy sources." Around 30 projects are under development.
In a conference call with reporters, CFO Simon Henry said the security situation in Nigeria was deteriorating and that oil stolen by militias breaking into pipelines in the chaotic Niger Delta has been running at $5-7 billion per year. If anything, he said that figure was increasing and impacting upon Shell's activities.
He said that when Shell closed part of one pipeline for repairs, thieves promptly attacked it elsewhere. "It's finger in the dike time," he said.
He said the thieves' disregard for spills left Shell little choice but to shut down operations.
"The environmental impact from the theft is of an order of magnitude higher than anybody would ever want to see," he said.
He also noted that Shell is awaiting word on licenses from the U.S. government before deciding whether it will resume attempts to drill offshore in the Arctic circle off the shore of Alaska in 2014, something that is opposed by environmental groups.
"We do expect to be able to drill" eventually, he said, adding that Shell currently values its Alaskan operations at $2.8 billion.
Shares rose 1.6 percent to 26.25 euros in early trading in Amsterdam.