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Shell profits double to $18.6bn, boosted by high oil prices

The Telegraph

Higher oil prices have helped doubled profits at Royal Dutch Shell this year, allowing it to steam ahead of rival energy giant BP.

Rowena Mason

By Rowena Mason 8:08AM GMT 03 Feb 2011

The Anglo-Dutch company made profits of $18.6bn (£11.5bn) on a cost of supply basis – stripping out the effects of inventory changes.

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For the fourth quarter, its profits were ahead of expectations at $5.7bn – missing the expectations of analysts.

Shell has seen a number of major projects from Qatar to Brazil start producing oil and gas this year, lifting output and revenue.

Production for the year rose 6pc to 3.3m barrels per day, up from 3.1m a year earlier.

Peter Voser, the chief executive of Shell, said: “Fourth quarter and full year 2010 earnings were supported by higher oil prices and chemicals margins. However, 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.”

Mr Voser has just completed a management shake-up that has seen 7,000 job losses and a renewed focus on building production. The company’s dividend will be 42 cents per share for fourth quarter of 2009 and is likely to be the same for the first quarter of this year.

Shell had been lagging BP until the Gulf of Mexico oil spill hit its nearest rival’s profitability and caused its dividend to be cancelled, then reinstated at half the previous level.

On Tuesday, BP reported an annual loss of $4.9bn and fourth quarter profits of $4.6bn, while warning production would be 11pc lower.

However, the profitability of both companies has been boosted by the strong oil price this quarter. The price of Brent crude hit $102 this week on worries about unrest in Egypt affecting the Suez canal, through which much of the world’s oil supply passes.

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