Shell pays out £1.6bn divi as profits soar on oil price rise

Published on Wednesday 27 October 2010 21:54

RISING oil and gas prices and higher margins saw global oil giants - including Shell - yesterday reveal bumper profits for the third quarter of the year.

• Shell chief executive Peter Voser: "Our results have rebounded substantially from levels a year ago"

Shell, Europe's largest oil company by market value and which employs 1,800 in Aberdeen, posted profits of 2.2 billion for the three months to 30 September, an increase of 18 per cent on a year earlier and comfortably ahead of expectations.

After stripping out exceptional costs and writedowns, the rise in underlying profits was even more impressive, up by 88.5 per cent to just over 3bn.

Peter Voser, chief executive of the UK-Dutch giant, predicted there was "more to come" from the company as it reaped the benefits of increased production and efficiencies.

"Our results have rebounded substantially from levels a year ago, driven by some improvement in industry conditions and Shell's strategy.

"We are making good progress against our targets."

Exxon Mobil, the world's largest non-state controlled oil company, also said yesterday that its net profit rose 55 per cent to 6.4bn compared with the same quarter in 2009.

And Italy's Eni, the nation's largest industrial business, comfortably beat forecasts with a 47.5 per cent rise in net profits to 1.5bn.

Underpinning the results for the oil majors was a 12 per cent rise in crude prices compared with the third quarter of 2009, driven by economic recovery worldwide and particularly strong demand from China, which became the world's largest energy user this year.

Higher natural gas prices - double levels seen in the third quarter of 2009 in the UK and up by 29 per cent in the US - added to the positive trading conditions for the energy giants.

Shell's results, which exceeded City forecasts, also reflected progress on its 2bn cost-saving plans, which are seeing 7,000 jobs go worldwide.

Upstream exploration and production profits more than doubled on a year ago at 2bn, but refining earnings were sharply lower as a result of continued difficult industry conditions.

In contrast to BP, which has stopped paying dividends in the wake of the Gulf of Mexico disaster, Shell said it paid 1.6bn to its shareholders during the third quarter.

Voser said the company was making good progress in implementing the company's strategy, including up to 5bn of asset sales as it refocuses its portfolio on projects with higher growth potential.

Tony Shepard, of Charles Stanley stockbrokers, said profits were between 10 per cent and 15 per better than market expectations and provided some encouraging signs that Shell's strategy and performance improvement is on track.

He added: "The share price has underperformed the wider stock market by 7 per cent over the past 12 months but we believe that this underperformance could reverse as the group begins to deliver on its strategy."Shares in Shell closed up 10p at 1,987p yesterday.

• A number of UK companies were yesterday awarded new oil and gas exploration licences as part of the 26th licensing round for the North Sea

Aberdeen-based Faroe Petroleum and Xcite Energy - along with Premier Oil, Nautical Petroleum and Valiant Petroleum - were among the successful companies named by the UK government's department of energy and climate change.

The round, the first time in 12 years that the UK government had offered licences for exploration in blocks in all its territorial waters, saw more than 350 bids submitted.