DCSIMG

Shell hits $7bn on oil price surge

SOARING oil prices helped power Royal Dutch Shell to record third-quarter profits of $7.37 billion (£4.13bn) yesterday, a 68 per cent hike that outstripped arch-rival BP's $4.4bn earlier this week.

Like its rival, Shell said it had benefited over the summer from surging oil and gas prices, with oil sometimes selling for over $70 a barrel. This more than compensated for production losses caused by the US hurricanes.

The profit was boosted by one-off gains of $1.57bn, mainly related to the sale of an interest in Dutch gas distributor Gasunie. Shell's nine-month profits came in at $17.54bn. The Shell figures calculated down to 45 million a day during the summer, against BP's 30m.

Jeroen van der Veer, Shell's chief executive, said: "We captured the benefit of high oil and gas prices and refinery margins, even after the impact of hurricanes in the US." He added: "We are attracting the key people to execute our projects and have recruited around 1,000 technical professionals this year."

Margarita Shevtsova, oil analyst at Bank Oyens & van Eeghen in the Netherlands, said: "We are positively surprised that the impact of hurricane costs is lower than anticipated."

Despite Shell's bumper performance, it was pipped by a $9.9bn net profit reported by Exxon Mobil yesterday. Shell, one of the largest producers in the Gulf of Mexico, was hit badly by hurricanes Katrina and Rita when they battered the gulf in August and September respectively. They caused $350m of damage to Shell's production and refining facilities, although much of this may be recovered from insurers.

Despite this, van der Veer said the group should stay just within its 3.5 to 3.8 million barrels of oil equivalent per day (boepd) production target range, and he predicted output of around 3.5 million boepd for the full year. Shell said higher oil and gas prices meant earnings from its exploration and production division more than doubled to $4.98bn in the third quarter.

The high oil price forced retailers to push pump prices for unleaded above 1 a litre. But Shell said this had not helped to boost profits as margins at its filling stations in Europe and Asia Pacific were weaker than a year ago.

Tony Shepard, an analyst at broker Charles Stanley, noted the huge sum that Shell had raised from disposals and that no plans to return the cash to shareholders were set out in the results statement.

This invited speculation that the company was gearing up for an acquisition next year, he said.

Investors were also positively surprised by the result from Shell's gas and power division, where profits were almost three times the expected levels because of strong liquefied natural gas prices.

 
 
 

Back to the top of the page

 

UNMISSABLE SHOWS.
UNMISSABLE COVERAGE.
MAKE THE MOST OF THE FESTIVAL
(BEFORE YOU MISS IT)

#WOWFEST

In partnership with

Complete coverage of the festivals. Guides. Reviews. Listings. Offers

Lets Go!

No Thanks