Shell Profits Climb 22%

Royal Dutch Shell Plc, Europe's biggest oil company, said third-quarter profit climbed 22 percent as record crude oil prices offset production cuts in Nigeria and the Gulf of Mexico.

Net income advanced to $8.45 billion from $6.92 billion a year earlier, the company said today in a statement. Excluding gains or losses from holding inventories and one-time items, profit was $8.04 billion, with gains of $800 million in additional fair-value adjustments

Earnings were boosted by crude's surge to an all-time high of $147.27 in New York on July 11. Oil has since slumped more than 50 percent. Militant attacks in Nigeria forced Shell to shut in production and Hurricanes Gustav and Ike swept through the Gulf of Mexico, leading to the shutdown of platforms.

“Upstream is very strong due to the sharp rise in crude oil prices year over year,” Gene Pisasale, who helps oversee $13 billion at PNC Capital Advisors in Baltimore, said before the earnings were released.

Shell, based in The Hague, said yesterday Chief Financial Officer Peter Voser will take over as chief executive officer in July. Voser, 50, will succeed Jeroen van der Veer who is due to retire. Van der Veer, 61, stayed on beyond the normal retirement age in the Netherlands after restoring investor confidence at the company following a reserves scandal in 2004.

Falling oil prices have held back the shares. Shell's London-listed Class A shares closed yesterday at 1,705 pence and are down 19 percent this year. That compares with an 18 percent decline for BP Plc, Europe's second-biggest oil producer, which earlier this week reported a third-quarter profit of $8.88 billion.

Exxon Mobil Corp., the world's biggest energy company, may later today report a record third-quarter net income of $11.9 billion, according to average estimates from analysts surveyed by Bloomberg. That would top Exxon Mobil's own record for the highest quarterly profit by a U.S. company without one-time gains.

Of the 35 analysts tracked by Bloomberg who cover Shell, 23 recommend buying the shares, eight advise holding the stock and four say “sell.”

Shell plans to counter lost production in Nigeria and Russia by mining Canadian oil sands and developing a Qatari gas- to-liquids venture. The “unconventional” projects are designed to replace aging fields as high oil prices encourage energy-rich nations to hold onto a bigger slice of their resources. The company's output has fallen in the past five years.

BP's Global Indicator Margin, a broad measure of refining profitability, averaged $8.03 a barrel in the third quarter, unchanged from a year earlier, according to BP's Web site.

Author: Jo Amey