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International Herald Tribune: : Shell says first-quarter profit rises despite falling oil prices

The Associated Press
Published: May 3, 2007

AMSTERDAM, Netherlands: Royal Dutch Shell PLC, Europe’s biggest oil company, reported a rise in first-quarter earnings Thursday, despite falling oil prices and declining profits at its production and refining arms.

Net income rose to US$7.28 billion (€5.34 billion), up 5.7 percent from US$6.89 billion, while sales fell 3.3 percent to US$73.5 billion (€53.9 billion).

Oil production fell 7.9 percent to 3.5 million barrels of oil per day.

Shell also reported a loss of 80,000 barrels a day at its Nigerian operations, which were shut down due to violent protests, including kidnapping of Shell workers by rebel groups seeking a larger share of oil profits.

“Efforts continue towards restoring safe operational conditions in (Nigeria’s) Niger Delta and, following an improvement in the security situation, preparations for a restart are underway,” the company said. However, “no firm date can be given for a return to full production.”

Selling prices fell to US$54.45 per barrel from US$57.39 per barrel a year ago.

Profit from oil production fell to US$3.51 billion (€2.57 billion) from US$3.74 billion in the year ago period.

At refining, earnings were US$1.80 billion (€1.32 billion) compared with US$2.1 billion a year earlier. Despite better margins, especially at Shell’s U.S. West Coast operations, the company was hurt by higher costs, taxes and write-downs on the value of some of its assets, as well as lower plant utilization rates.

The main reason Shell’s bottom line increased was due to the good performance of the stock market: the company made a profit of US$404 million (€296 million) from the sale of equities.

Shell’s chemicals division also performed well, with earnings of US$527 million (€386 million) compared with US$183 million a year ago.

Gas earnings were US$39 million (€29 million) higher at US$860 million (€631 million), despite a fall in prices, because gains from divestments outweighed impairment charges.


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