October 27th, 2006:

Mark Milner
Friday October 27, 2006

Shell took the City by surprise yesterday, posting better than expected underlying profits based on high oil prices and strong output figures.

Headline profits fell from $7.2bn in the third quarter of 2005 to $6.9bn (£3.7bn) this time but were well above the $5.7bn to $6bn analysts had forecast. Shell said that, stripping out the $1.7bn gain from asset sales last year, earnings a share were up 33% on a current cost of supply basis.

“This is a good performance by the group. Our earnings have proven resilient in the face of rising industry costs and weakening refining margins,” said Shell’s chief executive, Jeroen van der Veer. “Operating performance has been satisfactory, LNG [liquefied natural gas] growth has been impressive in the quarter and our upstream volumes have grown despite shut-downs in Nigeria.” read more

October 27, 2006
By Carl Mortished, International Business Editor
 
ROYAL Dutch Shell surged past BP to take the hotly contested title of Europe’s largest energy company as the Dutch firm announced a strong set of profits and rebuffed rumours that the company’s controversial Sakhalin-2 gas project was suffering from new budgeting problems.

Shell stock gained almost 4 per cent yesterday as its surprised the market with a 22 per cent gain in underlying profit to $6.9 billion (£3.65 million) in the third quarter, The profit boost, which confounded most City analysts, pushed Shell’s stock market value in London to £120 billion, slightly ahead of BP at £119 billion. 
 
Meanwhile, in Houston, Texas, ExxonMobil, the world’s largest oil company, surprised investors with a 7 per cent surge in oil and gas output to 4 million barrels per day in the third quarter, well ahead of an anticipated 5 per cent uplift. read more

By Saeed Shah
Published: 27 October 2006

Shell insisted yesterday that the Russian state should expect to heap revenues of up to $80bn (£44bn) from the giant Sakhalin-2 oil and gas project that the Kremlin has accused of breaching environmental rules.

The Anglo-Dutch oil giant said that it should recoup its costs by 2013, after which revenue payments to the Russian state would soar.

Shell is embroiled in a showdown with the Kremlin over the cost of the scheme, put by Shell at $20bn, which the authorities accuse the company of inflating. The Kremlin is concerned about the estimated cost – raised by Shell last year from $12bn to $20bn – because the big payments to the state do not kick in until the Sakhalin project has recouped its costs. Russia has also accused Shell of “criminal” violations of environmental standards at the project, located off the east coast. read more

October 27, 2006

Big Oil is at its peak. Investors in industry giants like Exxon Mobil, Royal Dutch Shell and BP have enjoyed a very good past few years as energy prices have climbed. But if the next few years are less rewarding, rising costs as much as lower oil prices will be to blame.

Look at Shell. Investors have raised their hats to the European energy giant, which just produced a stronger-than-expected rise in third-quarter earnings. Yet Shell’s underlying picture was more worrying. Margins thinned, as its cost of sales rose twice as fast as revenue, and Shell’s return on capital slipped from 26% in the second quarter to 23% in the just-ended quarter. read more

By JEFFREY BALL in Dallas and CHIP CUMMINS in London
October 27, 2006; Page A2

Several quarters into one of the flushest periods in the oil industry’s history, Exxon Mobil Corp. and Royal Dutch Shell PLC are showing signs the wild ride might be slowing and that they are settling in for a period of more-stable prices and results.

Exxon Mobil, of Irving, Texas, still reported third-quarter net income of $10.49 billion, up 5.7% from a year earlier and one of the largest quarterly profits for a U.S. company. But the average price at which Exxon sold a barrel of oil was $65.14, up 12% from a year earlier but nearly flat compared with the second quarter amid moderating oil prices this year. read more

THE WALL STREET JOURNAL ONLINE
October 26, 2006 4:56 p.m.

Crude-oil futures fell by more than $1 a barrel to nearly $60 on the New York Mercantile Exchange, as some traders locked in gains following a two-day rally on colder weather and a U.S. Department of Energy report of an unexpected drop in crude stockpiles. Here’s Thursday’s roundup of oil and energy news:

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EXXON’S WHOPPING PROFIT: Exxon Mobil reported its second-highest quarterly profit ever; and amid continuing political pressure on the oil industry, it said its fossil-fuel production rose 7%, a sign of what it called “active efforts to increase world energy supplies.” The world’s largest publicly traded oil company reported third-quarter net income of $10.49 billion, up 6% from a year ago and the second-best quarter ever for any publicly traded company. read more