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The New York Times: Profit Climbs 5.7% at Shell Despite Falling Oil Prices

Published: May 4, 2007

AMSTERDAM, — Royal Dutch Shell, Europe’s biggest oil company, said Thursday that its first-quarter earnings rose 5.7 percent, despite falling oil prices and declining profit at its production and refining arms.

Net income rose to $7.28 billion, from $6.89 billion a year earlier, while sales fell 3.3 percent, to $73.5 billion.

The improvement in Shell’s results was mainly a result of the good performance of the stock market. The company’s corporate financing arm reported earnings of $801 million, up from $227 million last year.

Production of oil and equivalents fell 6.4 percent, to 3.5 million barrels a day, largely because of lower natural gas production.

“That’s just part of the normal business,” Peter R. Voser, chief financial officer, said in a conference call, adding that the company’s long-term production prospects were solid.

Shell’s drop in production was also partly attributed to a loss of 80,000 barrels of oil a day at its Nigerian operations in March, which were already partly shut down because of violent protests by rebel groups seeking a larger share of oil profits.

Mr. Voser said that security in the Niger Delta had improved, but that the company’s facilities had suffered “considerable damage,” and that it was impossible to predict how much, if any, of the 178,000 barrels a day Shell was missing throughout Nigeria would be restored before the end of the year.

Shell has largely recovered from a 2004 accounting scandal in which it was forced to restate the size of its proven reserves, in part by investing heavily in nonconventional sources like oil sands and liquefied natural gas.

Shell’s American depositary shares rose 76 cents, to $71.45, on the New York Stock Exchange.

The company’s first-quarter results were not as strong as those of the world’s largest publicly traded oil company, Exxon Mobil, whose profits rose 10 percent, to $9.3 billion. But they compared favorably with those of its top European competitor, BP, which reported a 17 percent drop, to $4.66 billion.

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