Shell's results leave City unimpressed despite profit of £11.5bn

Higher oil prices and boosted production helped Shell drive up profits nearly five-fold in the final three months of 2010 to $5.7bn from $1.2bn a year earlier, producing an unchanged Q4 dividend of 42 cents.

The figures came two days after BP revealed its first annual loss in nearly two decades as the Gulf of Mexico disaster took its toll.

Despite the strong Shell performance, it fell short of market expectations, and the shares closed down nearly 3 per cent at 2,200p. Group chief executive Peter Voser said he was "not satisfied with the fourth-quarter results. We have more to do as you can see".

The company blamed weak refining margins, volatile downstream marketing margins due to the rising oil price and pressure on natural gas prices in some regions.

Jos Versteeg, an analyst with broker Theodoor Glissen, said: "There is disappointment, it is at the lower end of analyst expectations."

Jason Kenney, of Edinbugh-based ING Financial Markets, said: "Disappointing - certainly in the US upstream (exploration and production] division and oil products making a loss."

Excluding non-operating and exceptional items, the group's Q4 profit was $4.1bn, short of a consensus City forecast of $4.9bn. The performance, while easily outstripping BP, lagged other big rivals such as Exxon Mobile and Chevron.

Shell's Q4 upstream profits jumped to $5.1bn from $2.5bn, while downstream swung to a $411m profit from a $1.8bn loss.

Simon Henry, the group's chief financial officer, said a major Dutch refinery remained shut and would not start until at least end-February, which would hit first-quarter results.

Shell's oil and gas production rose 6 per cent to 3.3 million barrels of oil equivalent per day (boepd) last year, and Voser said he expected a similar level in 2011, with BP's Gulf of Mexico oil spill continuing to have an impact on production there.

Henry said: "For 2011, we're expecting a 50,000 boepd impact against the plans we otherwise would have had in place… due to the slow pace of the restart which we expect now in the Gulf."

The firm also said it would now not start to look for oil off the coast of Alaska until 2012. It had planned to start exploration this year, but said US regulators had not yet granted all necessary permits.

Voser declined to comment on market rumours that the group had considered a takeover bid for BP. "We have enough on our plate to deliver rather than focusing on hypothetical takeovers," he said.

He added that Shell remained on track for "unprecedented" growth in financial performance and production by 2012.