Shell Q4 profits tripled on higher prices, output

[February 03, 2011]  AMSTERDAM (AP) -- Royal Dutch Shell PLC on Thursday reported that fourth quarter profit more than tripled from a year earlier as oil prices rose and the company boosted production.

In addition, refining operations reversed losses from a year earlier to make a healthy profit, though the company noted they had weakened from the third quarter of 2010.

Fourth quarter net profit was $6.79 billion, up from $1.96 billion in the same period a year earlier. The figure included net one-time gains of $1.59 billion, notably from the sale of shares in Australia's Woodside Petroleum, compared with net charges of $1.60 billion in the same period a year earlier, mostly for write-downs on asset values and restructuring costs at refining operations.

Production was up 6 percent to 3.5 million of barrels of oil per day, reflecting heavy investment in new capacity Shell has made in recent years.

Shares, however, fell 2.7 percent to euro25.875 in early Amsterdam trading.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers in London, said investors were taking profits after a 27 percent run up in the share price over the past year.

"Even so, net income was well above expectations and a significant improvement on the previous year," he said in a note on the earnings.

"Higher oil prices inevitably provided a tailwind, but the production story is central."

Chief Executive Peter Voser repeated forecasts for increasing production by 11 percent from 2009 levels by the end of next year, and increasing cash-flow by at least 50 percent.

"These are ambitious targets, but we are on track," said Voser in a statement. He noted the fourth quarter results were "impacted by weak refining margins (and) pressure on certain regional natural gas prices."

Shell said it plans at least $25 billion in capital expenditure this year and kept its dividend flat at $0.42 per share.

At production, earnings rose to $5.10 billion from $2.54 billion a year earlier. Those earnings included the large gain from Woodside. Shell said the 6 percent production increase was helped by a 115,000 barrel per day increase in output in Nigeria. Several new projects brought an additional 160,000 barrels per day on line.

The company did not give a figure for its average selling prices. Oil prices globally were up about 15 percent from the same period the previous year, though that helped Shell only partially since much of the company's production is in natural gas.

Shell's refining arm made a profit of $411 million versus a loss of $1.76 billion in the fourth quarter of 2009 due to the charge. The arm this quarter had "higher realized refining margins globally, higher refinery plant intake volumes and lower operating expenses," Shell said.

[Associated Press; By TOBY STERLING]

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