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Reuters: Shell profit beats forecasts

Shell profit beats forecasts
Thu May 4, 2006 7:47 AM BST

By Tom Bergin

LONDON (Reuters) – Royal Dutch Shell beat analysts' forecasts and reported a 12 percent jump in first-quarter profit on Thursday, as oil prices more than compensated for falling production.

Shell (RDSa.L: Quote, Profile, Research) said in a statement that current cost of supply net income, which strips out changes in the value of inventories, was $6.088 billion (3.32 billion pounds).

Excluding a non-operating gain of $113 million, the result was $5.975 billion, ahead of an average forecast of $5.56 billion in a Reuters poll of seven analysts.

“These are good, solid underlying results and better than we have expected,” Peter Hutton at van Lanschot Bankiers said. “But it is still not delivering the same amount to investors, compared with BP.”

Anglo-Dutch Shell, the third-biggest western oil firm by market capitalisation, said oil and gas production fell 3 percent to 3.746 million barrels of oil equivalent per day (boepd) in the first quarter, ahead of the poll forecast of 3.6 million boepd.

Shell said it was losing 165,000 boepd due to attacks on its Nigerian operations. Fortunately for Shell, these are not the most profitable barrels in its portfolio.

Shell's upstream oil and gas production unit propelled the overall profit increase, thanks to higher oil prices, but earning's fell sharply at the company's refining and marketing unit.

The fall in refining earnings partly reflect a big one-off gain last year due to asset sales, but margins and throughput also fell.

Shell boosted its dividend 9 percent to 0.25 euros per share.

Analysts are still waiting for Shell's strategy statement later in the day, at which the company should outline future growth plans.

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