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Financial Times: Shell exceeds City forecasts

By Rebecca Bream and Maggie Urry
Published: July 27 2007 03:00 | Last updated: July 27 2007 03:00

Royal Dutch Shell beat analysts’ expectation with an 18 per cent rise in second-quarter earnings, in contrast to BP, which reported lower earnings this week.

Shell yesterday announced second-quarter profits of $8.67bn (£4.22bn). On a current cost of supplies basis, stripping out the effect of changes in prices on inventories, Shell’s figures were 20 per cent higher at $7.56bn.

Downstream businesses, such as refining, marketing and chemicals, accounted for much of the rise in profits, but the results were also boosted by profits on divestments of $660m in thequarter, compared with a $232m loss in the same period of 2006.

Jeroen van der Veer, chief executive, said Shell was “rejuvenating our portfolio” through the sale of non-core assets and the investment in long-life projects such as Canadian oil sands and the Sakhalin-2 project off the far eastern coast of Russia.

Mr van der Veer said it was becoming more difficult for oil companies to secure oil reserves. “Access to ‘easy’ oil and gas, like the North Sea, is decreasing. The supplies of tomorrow will come from more complex projects, far away, with political concerns and risks.”

He said Shell was right to look at the prospect of investing in Iran, where it has signed a preliminary agreement with the Iranian government to develop the South Pars gas field. “You have to spread the countries where you work.”

Mr van der Veer confirmed that Shell had received a letter from a group of large US pension funds expressing concerns about its activities in Iran. But he said a final investment decision on South Pars was at least a year away.

Shell’s oil and gas production fell in the second quarter, to an average of 3.18m (3.25m) barrels of oil equivalent per day. This was mainly because of lower gas production, in response to lower demand in north-west Europe following an unusually mild winter.

The A shares fell 32p to £19.37.

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1 Comment on “Financial Times: Shell exceeds City forecasts”

  1. #1 Pipeliner
    on Jul 27th, 2007 at 02:40

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