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Higher oil prices lift Royal Dutch Shell’s profits by 60 per cent

Times Online

April 28, 2010 Robin Pagnamenta, Energy Editor

Royal Dutch Shell announced a 60 per cent increase in profits this morning, propelled by higher oil and gas prices and growth in production.

Shell, Europe’s biggest oil company, said that the current cost of supply profits, a key industry measure which strips out fluctuations in the price of energy, reached $4.8 billion in the three months to March 31, up from $3 billion a year ago.

The performance was boosted by a 6 per cent increase in the Anglo-Dutch company’s oil and gas production, which hit 3.59 million barrels per day after the ramp-up of the Sakhalin II project in Russia and Parque das Conchas in Brazil.

Together these are producing an extra 120,000 barrels of oil per day, Shell said.

The results reflected a powerful rebound in global oil prices, which averaged $76 during the period, up from just over $41 a year ago.

Peter Voser, the chief executive, said: “Our results have improved considerably with year-ago levels and our profitability has increased from the low levels we saw in the fourth quarter of 2009. This has been driven by higher energy prices, operational and production performance and Shell’s growth programmes.”

Mr Voser said that Shell detected signs of an “improving economic outlook” but emmphasised that “we are not relying on it”. He said that the company was focused on new project start-ups and on cutting costs.

The results also reflect an aggressive turnaround plan at Shell, which started after Mr Voser’s appointment last July.

He has already cut 5,000 jobs, mostly white-collar, and intends to trim a further 1,000 jobs and reduce overall costs by an extra $1 billion this year.

Shell reported an improvement in the performance of its refining and marketing division, compared with the nadir hit at the end of last year when it posted a $1.7 billion loss amid a 20-year low in industry refining margins.

Shell’s downstream business posted earnings of $743 million during the first quarter — 26 per cent lower than the same period a year ago.

The company is planning to sell off part of its global refining portfolio in an effort to rebalance the business.

As expected, Shell said that it was keeping its dividend frozen at 42 cents per share.

Shares in the company opened 1 per cent higher following the announcement at 2009.5p.

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