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Royal Dutch Shell Reports Strong Earnings for Fourth Quarter

A version of this article will appear in print on February 4, 2011, in The International Herald Tribune.

By JULIA WERDIGIER

LONDON — Royal Dutch Shell said Thursday that its earnings had more than tripled in the fourth quarter because of higher oil and gas prices, and as investments in new projects started to pay off.

Profit at Europe’s biggest oil company rose to $6.79 billion in the last three months of 2010, compared with $1.96 billion in the same period a year earlier.

“We are making good progress against our targets, and there is more to come from Shell,” Peter Voser, Shell’s chief executive, said in a statement.

Excluding non-operating and one-off items the result was $4.1 billion, short of the $4.85 billion average estimate of analysts polled by Reuters. The shares were down 3 percent in early trading.

“Profits are somewhat shy of market estimates,” Richard Hunter, head of British equities at Hargreaves Lansdown in London, said. He added that the “setback is likely to be short-lived, however.”

Shell’s earnings follow a set of strong results from larger rivals such as Exxon Mobil, which reported its highest quarterly profit in more than two years. Earnings at BP, Shell’s closest rival, failed to meet analyst expectations, however, and the company announced the sale of assets that it said would make it a smaller and more agile company.

Unlike BP, which predicted its production would fall this year because of asset sales and the aftermath of the Gulf of Mexico rig explosion, Shell said it was confident of meeting its target of an 11 percent increase in oil and natural gas production from 2009 to 2012.

“These are ambitious targets, but we are on track,” said Mr. Voser, who managed to halt a drop in production last year with a large investment program. He also cut costs and sold less lucrative assets to improve profitability.

Shell started six key projects last year, including in Brazil and Qatar, where it started offshore gas production this year. Oil and natural gas production rose 5 percent to 3.3 million barrels of oil equivalent per day last year. The company invested $3 billion in exploration activities last year, about three times more than BP.

Mr. Voser said he expects total investments of as much as $27 billion this year, including $1.6 billion for a biofuels joint venture in Brazil with Cosan, a Brazilian company that harvests and processes sugar cane.

Shell said it would leave the dividend for the first quarter of this year unchanged at 42 cents a share.

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