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Royal Dutch Shell sees quarterly profit slip to 6.948 billion dollars
AFP
LONDON
Petroleumworld.com 10 27 06Anglo-Dutch energy group Royal Dutch Shell said Thursday that its adjusted net profit fell by 3.0 percent in the third quarter when output was hit in Nigeria and the Gulf of Mexico.
Shell shares rose sharply, and one broker said that the underlying results were 22 percent above forecasts.
Net profit, excluding changes to the value of Shell's oil inventories, dropped to 6.948 billion dollars (5.490 billion euros) in the three months ended September 30, Shell said in an official earnings release.
Despite the fall, Shell's nominal profit value remains huge largely owing to high oil prices, which soared to record peaks above 78 dollars per barrel in third-quarter trading on heightened supply concerns.
Excluding changes to the value of Shell's oil inventories and one-off items, Shell's net profit surged 21 percent to 7.03 billion dollars in the third quarter, helping the group's share price to jump in London trade.
Production grew one percent to 3.251 million barrels of oil equivalent per day, compared with a year earlier.
Shell said that excluding the impact of security problems in Nigeria and damage caused by last year's hurricanes in the Gulf of Mexico, production increased by 3.0 percent on a 12-month comparison in the third quarter.
"Our earnings have proven to be resilient in the face of rising industry costs and weakening refining margins," Royal Dutch Shell's chief executive Jeroen van der Veer said in comments accompanying the earnings release.
"Cost pressure remains a significant challenge for our industry," he added.
Shell's operations were particularly hit in Nigeria where output fell by 185,000 barrels of oil a day during the third quarter, compared with the same period in 2005.
Shell was forced to suspend production in the Western Delta over security fears as contract workers were kidnapped and installations were attacked by militants.
"Whilst efforts continue towards restoring safe operational conditions in the Niger Delta, it is unlikely that the shut in facilities in Nigeria will be restored in 2006," the company said Thursday.
"No firm date can be given for the re-start of the production, nor is it possible to predict the rate of ramp-up to full production.
"Restricted access in the area continues to impact on the drilling programme for the future, and the progress of new projects."
On Wednesday, a group of youths invaded two flowstations belonging to Shell in Nigeria's southern Rivers State, an official of the company had told AFP.
Turning to its giant Sakhalin-2 project in Russia, Shell said work is now "more than 80 percent complete" and on track for first LNG (liquified natural gas) deliveries in 2008.
The cost of the project remains "in line" with the upgraded estimate of 20 billion dollars it gave in July last year, it added.
But on Wednesday, Russia turned up the heat on the project off its Pacific coast, threatening possible criminal prosecutions and license withdrawal over environmental violations.
Shell is operating the project with Japan's Mitsui and Mitsubishi.
On Thursday meanwhile, in late morning trading, Shell 'B' shares jumped 3.49 percent to 1,906.25 pence on London's FTSE 100. The leading share index rose 0.29 percent to 6,232.50 points.
US broker Merrill Lynch described Shell's underlying results as "very strong", coming in some 22 percent above its forecasts.
The broker noted that the main area of strength was in the downstream businesses with Gas and Power delivering results some 50 percent above expectations and Oil Products some 30 percent above forecasts.
Earlier this week, Shell's rival BP reported that its net profits rocketed by more than half in the third quarter, owing partly to asset disposals.
BP's net profit, excluding changes to the value of its crude oil inventories, leapt 58 percent to 6.975 billion dollars in the three months to September 30, compared with the same period of 2005.
AFP 26 1122 GMT 10 06
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