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The Wall Street Journal: Shell’s Net Falls 34% as Unrest In Nigeria Offsets Oil-Price Rise

October 26, 2006 3:19 a.m.

LONDON — Royal Dutch Shell PLC said Thursday its third-quarter net earnings declined 34% as continued unrest in Nigeria, higher U.K. taxes and cost pressure more than offset a rise in oil prices.

Shell said net income fell to $5.94 billion, or 93 cents a share, compared with $9.03 billion, or $1.35 per share, in the same period a year earlier. But revenue rose 10% to $84.25 billion from $76.44 billion.

Third-quarter 2005 earnings had included divestment gains of some $1.7 billion related to the divestment of pipeline assets held through Gasunie NV in the Netherlands.

Third-quarter 2006 profit was hurt by lost Nigerian output, a 10-percentage-point rise in U.K. North Sea taxes and cost pressure.

Shell said average quarterly output was up 1% at 3.251 million barrels of oil equivalent a day, compared with 3.207 million barrels in the year-earlier period, as new projects such as Nigeria’s Bonga have come on stream within the past 12 months.

“Our earnings have proven to be resilient in the face of rising industry costs and weakening refining margins. Operating performance has been satisfactory. LNG growth has been impressive in the quarter, and our upstream volumes have grown despite the shut-downs in Nigeria,” said Chief Executive Jeroen van der Veer.

Shell’s exploration and production segment reported earnings of $3.74 billion compared with $4.98 billion a year earlier, while the gas and power unit saw earnings rise to $787 million from $556 million in the same quarter last year, which included gains of $94 million mainly related to divestments.

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