LONDON (AP) — Anglo-Dutch energy giant Royal Dutch Shell says second-quarter earnings dropped 26% as lower oil and natural gas prices overshadowed an increase in production.

Earnings based on the current cost of supplies and excluding one-time items — Shell's preferred measure — fell to $3.46 billion ($4.2 billion) from $4.69 billion in the same period last year. Shell says that reflected lower oil and gas prices, as well as weaker chemical and refining margins. Net income was down 50 percent to $3 billion.

Production rose 4% to the equivalent of 3.58 million barrels of oil a day.

Shell CEO Ben van Beurden says Shell faced "challenging macroeconomic conditions in refining and chemicals, as well as lower gas prices."