Shell boosted by higher oil prices


Royal Dutch Shell posted a near-doubling in full-year profits on Thursday as the Anglo-Dutch oil major reaped the benefits of high oil prices and higher production, putting more distance between itself and rival BP.

Peter Voser, chief executive, promised there was "more to come" as Shell brings on a new wave of projects from Qatar to Brazil.

Earnings for the full year on a "current cost of supplies basis", adjusting for the effect of price changes on inventories, were $18.6bn compared with $9.8bn a year ago.

Fourth-quarter earnings, excluding one-off items, were $4.1bn compared with $2.8bn in the same period a year ago, but below analysts' expectations, causing shares in Shell to open more than 3 per cent lower in London.

Earnings were hit by "weak refining margins, pressure on certain regional natural gas prices, and volatility in downstream marketing margins as a result of the rising oil prices," Mr Voser said.

Shell is paying a fourth-quarter dividend of $0.42 per ordinary share, unchanged from the same period last year.

During the year, the company increased production by 5 per cent to 3.3m barrels of oil equivalent per day. Sales of liquefied natural gas rose 25 per cent. Shell made $7bn of acquisitions and invested $3bn in exploration activities in 2010.

The results stand in contrast with those of BP, which earlier this week reported its first annual loss in more than 20 years due to charges related to last year's Gulf of Mexico oil spill.

After a period of heavy investment Shell is bringing online a number of projects, with six starting up last year. The projects will underpin the group's targets for an 11 per cent increase from 2009-12 of oil and natural gas production from 2009-12, as well as an improvement of its refining and marketing portfolio.

"This growth will drive a 50-80 per cent increase in cash flow from operations from 2009 to 2012, measured at $60-$80 oil prices. There are ambitious targets, but we are on track," said Mr Voser.

Crude oil prices broke through the $100 a barrel mark this week in London, with Brent crude hitting $103 a barrel on Thursday, the highest level since 2008.

Profits in the fourth quarter from Shell's exploration and production business, the largest part of the group, were up 101 per cent to $5.1bn, although that was flattered by a net gain of $1.65bn