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Higher Oil Prices Lift Shell’s Net


OCTOBER 30, 2008 4.15 A.M. ET

LONDON — Royal Dutch Shell PLC Thursday posted a 22% rise in net profit for the third quarter as higher oil prices offset a drop in production.


(A Shell fuel tanker approaches the Kingsbury fuel terminal in central England on June 11, 2008.)

The Anglo-Dutch energy company said net profit for the three months ended Sep. 30 totaled $8.45 billion, compared with $6.92 billion for the third quarter of 2007.

The clean replacement cost of supplies, a keenly watched figure that strips out gains or losses from inventories and other nonoperating items, was up 44% to $8.84 billion in the third quarter, compared with $6.13 billion in 2007. This was above analysts’ expectations of $7.01 billion in a Dow Jones Newswires poll of at five analysts.

Total revenue was $131.57 billion, up 45.1% from $90.70 billion in the third quarter of 2007. Third-quarter earnings per share were $1.37 compared with $1.10 in the same period of the previous year.

Shell Chief Executive Jeroen van der Veer said the results were satisfactory. He said Shell is watching the world economic situation, which has contributed to a halving of the price of oil since July, very closely. “Shell is robust across a wide range of energy prices,” he said.

Jason Kenney, analyst at Dutch bank ING, said the results are “good numbers.”

“Oil products produced a phenomenal result,” he said. The division was $777 million ahead of expectations on a CCS basis at $2.30 billion, he said.

Total oil and gas production was 2.93 million barrels of oil equivalent per day, a decline of 6.6% on the year due to shutdowns in the U.S. Gulf after Hurricane Ike, continued sabotage on Nigerian operations and the reduction in the company’s take from production sharing contracts due to the higher oil price. Analysts were expecting production decline of 6.3% to 2.94 million boe per day.

Shell Class B shares closed at £16.70 ($27.70) Wednesday, a drop of almost a quarter from their peak in mid-May as concerns about the global economy have driven down the oil price.

Write to James Herron at [email protected]


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