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Financial Post (Canada): Fuel prices push Q1 Shell profit up 7.2%: $447-million net income

Fuel prices push Q1 Shell profit up 7.2%: $447-million net income: Athabasca output reduced by torn conveyor belt
Financial Post – Canada; Apr 25, 2006

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Shell Canada Ltd., the oil company controlled by Royal Dutch Shell PLC, said first-quarter profit rose 7.2% as fuel prices rose. Gains were blunted by equipment failures that cut output at an oilsands project.

Net income climbed to $447-million, or 53 cents a share, from $417-million (50 cents) a year earlier, the Calgary-based company said yesterday in a statement. Sales climbed 15% to $3.45-billion.

Output from the Athabasca Oil Sands Project, owned 60% by Shell Canada, was reduced after a torn conveyer belt disrupted mining and refining operations in February and March. The company's share of bitumen, an extra-heavy crude extracted from Alberta's tar-like reserves, fell about 2% from a year earlier to 77,400 barrels a day.

The Athabasca development had total output of about 129,000 barrels a day in the quarter, down from 132,000 barrels a year earlier. San Ramon, Calif.-based Chevron Corp. and Calgary- based Western Oil Sands Inc. each own 20% of the project.

Mine repairs reduced the supply of bitumen for an Edmonton upgrading refinery. The plant turns molasses-like bitumen into synthetic crude, which can be made into gasoline, diesel and other petroleum products. The repairs raised the project's operating costs 9% to $26.40 per barrel processed, Shell Canada said.

The synthetic crude sold for $57.04 a barrel, up from $51.46 a year earlier, as petroleum demand increased in China, India and the United States. Shell Canada's oilsands unit earned $120-million in the quarter, up from $98-million a year earlier.

Natural-gas sales increased to 533 million cubic feet a day from 514 million a year earlier, the company said, and the fuel sold for $8.29 per thousand cubic feet, a gain of 30% from a year earlier.

Per-share profit was 1 cents lower than the average estimate from eight analysts surveyed by Thomson Financial. Thomson has declined to comment on the parameters of its estimates.

Shares of Shell Canada fell 81 cents to $43.93 yesterday in Toronto Stock Exchange trading. Before yesterday, the stock had climbed 6.4% this year.

Europe's Royal Dutch Shell, the world's third-largest publicly traded oil company, owns about 78% of Shell Canada's shares.

Shell Canada is the fourth-largest Canadian oil and gas producer, ranking behind Imperial Oil Ltd., EnCana Corp. and Petro-Canada.

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