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Shell Profit Rises on Record Crude Prices: profits boosted due to ‘militant attacks in Nigeria’ by Shell’s paid thugs

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Bloomberg: Shell Profit Rises on Record Crude Prices, Higher Gas (Update1)

By Fred Pals

April 29 (Bloomberg) — Royal Dutch Shell Plc, Europe’s biggest oil company, said first-quarter profit climbed 25 percent, boosted by record crude prices and higher natural gas.

Net income advanced to $9.08 billion from $7.28 billion a year earlier, The Hague-based company said today in a PR Newswire statement. Excluding inventory changes and one-time items, earnings beat analysts’ estimates.

Oil touched $100 for the first time on Jan. 2 and reached $111.80 a barrel in March as a falling dollar spurred investors to buy commodities, while natural gas increased 22 percent on average. The rising oil price squeezed refining profits as it outpaced gains for processed fuels such as gasoline and diesel. Crude touched a record $119.93 yesterday.

“Earnings have to grow with oil prices that high,” Dirk Hoozemans, who helps manage the equivalent of $21 billion at Rotterdam-based Robeco Group, said by phone before the earnings were reported. Results at the gas and power and exploration and production divisions likely compensated for weaker refining margins, he said.

Shell fell 18 percent in London trading in the first quarter, a larger drop than BP Plc and Exxon Mobil Corp. in the period. BP, based in London, also reports profit today, and Exxon Mobil, the world’s biggest oil company, announces results on May 1.

Twenty-three analysts recommend buying Shell, while 12 advise holding the shares and four suggest selling the stock.

Excluding gains or losses from holding inventories and one- time items, profit was $7.85 billion. That beat the $6.88 billion median forecast of eight analysts surveyed by Bloomberg.

Profit Estimate

Chief Executive Officer Jeroen van der Veer is betting on Canadian oil sands and a gas-to-liquids fuel venture in Qatar to counter falling production from conventional oil projects. Van der Veer said in January that Shell has to deal with state-run companies demanding better terms when negotiating energy deals and that this trend will continue.

Shell’s output has fallen for the past five years as the company ceded a stake in Russia’s Sakhalin-2 venture and militant attacks in Nigeria kept fields offline.

Shell, the biggest foreign oil company in Nigeria, said April 21 a militant attack on a pipeline in the country cut as much as 169,000 barrels a day of Bonny Light crude. Assaults have halted more than 20 percent of exports from Nigeria, the fifth-biggest supplier to the U.S.

Lost Production

Nigeria is losing about 50 percent of its current oil production because of a labor strike at Exxon Mobil’s operations and attacks on a Shell pipeline, the country’s oil minister said on April 25.

Profit from turning crude into fuels such as gasoline and diesel fell to $4.57 a barrel in the period from $9.41 a year earlier, according to BP data. ConocoPhillips, the third-largest U.S. oil company, said April 24 that first-quarter profit from refining and selling fuels slid 54 percent, while net jumped 17 percent to $4.14 billion on rising crude and gas prices.

Shell forecasts annual production growth of 2 percent to 3 percent from 2010, according to its annual report. Output this year is expected to decline “slightly” from 2007 should insecurity in Nigeria continue, the company said.

Shell replaced 124 percent of the oil and natural gas it pumped last year with new discoveries, it said in an annual strategy update on March 17.

((Shell will hold a Webcast presentation, starting at 14:00 p.m. London time. To register and listen go to

To contact the reporters on this story: Fred Pals in Amsterdam at [email protected];

Last Updated: April 29, 2008 01:48 EDT

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