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The Wall Street Journal: Shell’s Net Grows 16% Amid Rising Oil Prices

October 25, 2007 3:30 a.m.

LONDON — Royal Dutch Shell PLC Thursday said third-quarter net income rose 16%, as rising oil prices more than offset the loss of control of a Sakhalin venture and weaker refining margins and gas prices.

Shell posted net income of $6.92 billion, or $1.10 a share, compared with $5.94 billion, or 93 cents a share, a year earlier.

Revenue at the Anglo-Dutch oil firm increased 7.7% to $90.7 billion from $84.25 billion. Shell’s earnings conform to international financial reporting standards, which differ from U.S. generally accepted accounting principles.

Rival BP on Tuesday posted a 29% fall in net profit, as the British oil giant suffered from large-scale disruption to its U.S. refineries. (See related article.)

Shell’s earnings were boosted by the continued rise in oil prices. Last week, U.S. light, sweet crude futures hit a record of more than $90 a barrel, though in inflation-adjusted terms they remain below the $101 a barrel seen in 1980.

Shell said clean current cost of supplies earnings were $6.13 billion, more than the $5.47 billion analysts had expected but less than the $7.03 billion Shell posted a year earlier. Clean current cost of supplies earnings strip out the impact of oil prices on inventories and exclude exceptional items.

United Kingdom North Sea crude benchmark Brent traded up 7.5% on average at $74.80 a barrel, from $69.60 a barrel, according to Shell’s estimates. U.K. natural gas prices fell 9.2% to 30.7 pence a therm, compared with 33.8 pence a therm, Shell said. Average quarterly output sank 3.5% to 3.14 million barrels of oil equivalent a day, from 3.25 million barrels of oil equivalent a day.

Output was also hurt by the reduction of Shell’s stake in the Sakhalin Energy Investment Co. Ltd. joint venture in Russia, in which Shell gave up control to state-run OAO Gazprom. In April, Shell completed the sale of a 27.5% stake in the project to Gazprom, leaving the Anglo-Dutch company with 27.5%.

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