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Daily Telegraph: Shell hits record profit

Daily Telegraph: Shell gas pumps

(Analysts predict a more difficult year for Shell in 2007)

By Stephen Seawright
Last Updated: 10:03am GMT 01/02/2007

Royal Dutch Shell unveiled record annual profits as the high price of oil outweighed disruption to production.

The oil giant’s “current cost of supply” (CCS) net profit – a closely watched measure that excludes gains from rising fuel stock values and one-off charges – rose 12pc to $25.4bn (£12.9bn).

For the whole of 2006, Shell achieved an average oil price of $60.13 per barrel compared to $50.36 a year earlier.

The recent decline in the price of oil has led analysts to forecast a much more difficult year for Shell in 2007.

Shell’s results were boosted by a better than expected performance in the fourth quarter when profit jumped 11pc to $6.01bn.

While the fourth-quarter result was higher than the same period a year earlier, the figure was still lower than the $6.95bn earned in the previous three months as oil prices have plunged by about 30pc since hitting a record $77 in August.

Shell has been working to increase its reserves as attacks by militants on its Nigerian facilities disrupted production and the group had to give up half its stake in the Russian Sakhlain II project.

Chief executive Jeroen van der Veer said: “Our exploration strategy is paying off. Hydrocarbon production was underpinned by the production restart from the Mars platform in the USA, growth in LNG and deep water Nigeria.

“However, onshore Nigeria we continue to have major security related concerns.”

Shell invested $21bn last year and production stood at 1.3bn barrels of oil equivalent.

The company expects to spend between $22bn and $23bn this year, with production of oil and gas reaching 3.3m-3.5m barrels of oil equivalent a day.

The dividend for last year was increased by 8 cents to €1, while the fourth quarter payout rose 2 cents to €0.25.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/02/01/bcnshell01.xml

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