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Shell Profit Jumps but Misses Expectations

THE WALL STREET JOURNAL

FEBRUARY 3, 2011

By JAMES HERRON

LONDON—Royal Dutch Shell PLC Thursday posted a 48% rise in adjusted profit for the fourth quarter, but still missed analyst expectations due to lower refining margins, higher taxes and weaker trading results.

Shell Chief Executive Peter Voser said the company’s improved performance at the end of 2010 has laid the foundation for a strong 2011. The company benefited from rising oil and gas prices and a large increase in oil and gas output from a year earlier.

The Anglo-Dutch energy company said the clean current cost of supplies, a keenly watched figure that strips out gains or losses from inventories and other nonoperating items, was $4.11 billion in the three months ended Dec. 31, compared with $2.77 billion a year earlier.

This was well below expectations of $4.74 billion from a Dow Jones Newswires poll of nine analysts.

“Our earnings were impacted by weak refining margins, pressure on certain regional natural gas prices, and volatility in Downstream marketing margins as a result of rising oil prices,” said Mr. Voser.

Shell also said earnings were hurt by higher taxes and lower trading contributions. BP PLC , which missed earnings forecasts this week, reported similar negative impacts from trading and higher taxes.

Total oil and gas production for the period was 3.496 million barrels of oil equivalent a day, up 5% from a year earlier due to output from new projects. Analysts had expected a production rise of 1.3%.

Net profit for the quarter totaled $6.79 billion, more than triple the year-earlier $1.96 billion. Group revenues were $105.53 billion, up from $83.42 billion. Diluted earnings per share were $1.10, up from 32 cents.

Write to James Herron at james.herron@dowjones.com

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