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Shell reports 22 percent rise in 3Q profit

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[October 30, 2008]  AMSTERDAM, Netherlands (AP) -- Royal Dutch Shell PLC, Europe's largest oil company, Thursday reported a 22 percent jump in net profit for the third quarter, despite a fall in production, thanks to high oil prices and gains from the sale of operations.

The company earned $8.45 billion, up from $6.92 billion a year ago, as sales rose 45 percent to $132 billion. The earnings included one-off gains of $2.06 billion, mostly from the sale of operations, up from $265 million in such gains a year earlier.

Auto RepairShell's oil production fell to 2.93 billion barrels of oil and equivalents per day from 3.14 billion a year earlier. The company's average selling price was $111.18 per barrel, up from $70.81 a year ago.

Given the steep fall of oil prices in recent weeks, Chief Executive Jeroen van der Veer said the company was watching the global economic situation closely, but added Shell would be profitable amid a wide range of energy prices.

He said the third quarter results represented "satisfactory earnings and operating performance."

"Our strategy remains to pay competitive and progressive dividends, and to make significant investments in the company for future profitability," he said in a statement.

On Wednesday, Shell said that Chief Financial Officer Peter Voser will be promoted to Van der Veer's job after he retires in July 2009.

Analyst Alexandre Weinberg of Petercam Securities said the results were "clearly better than what was expected...and this is throughout all divisions."


"Going forward, we clear expect the weaker pricing environment to take its toll on profit," he said. But lower selling prices could actually help oil majors since smaller competitors will face financing problems and production costs will fall.

He also noted the company's strong cash position offered insurance for its dividends and ability to invest in new capacity and repeated a "buy" rating on shares.

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The company's stock was down 2 percent at 21.00 euros ($22.78) in early Amsterdam trading.

Shell's exploration and production division increased profit 65 percent to $5.50 billion, entirely due to oil price increases. Shell said a 10 percent fall in oil production was attributable in part to hurricanes in the Gulf of Mexico. Gas production was down 2 percent.

The company's refining arm showed a loss of $44 million, down from $2.15 billion profit a year ago. On a "current cost of supplies" basis -- a closely watched industry standard that strips out differences in the rise and fall of oil prices between drilling and refining, earnings were $2.30 billion, up from $1.65 billion.

[Associated Press; By TOBY STERLING]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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