Royal Dutch Shell today posted a 15 per cent increase in second quarter profit on the back of increased production and higher oil prices.
Net income rose to $4.39 billion from $3.82 billion a year earlier, The Hague-based Shell said today in a statement. Excluding one-time items and inventory changes, earnings beat analyst estimates. Peter Voser, in his second year as chief executive, has merged units, pledged as much as $8 billion of asset sales in 2010 to 2011.
The US ban on deepwater drilling following BP oil spill will hold back development of Shell reserves in the Gulf of Mexico and Alaska. "I expect Shell to be in the situation to continue to pleasantly surprise in the coming quarters," Henry Dixon, a London-based fund manager at Matterley Asset Management, said before the earnings were released.
The results follow a record loss for BP after Shell's close rival set aside about $30 billion earlier this week to pay for cleanup costs and liabilities arising from the Macondo well disaster. Exxon Mobil Corp., the largest US oil company, is scheduled to report results later today.
Excluding one-time items and inventory changes, Shell's earnings were $4.21 billion.
Stock Performance Shell's Class A shares traded in London are down 5.1 per cent this year, compared with a 33 per cent decline for BP, which at one point lost more than half its market value on concerns over the mounting cost of containing the leak.
Mr Voser is targeting hard-to-reach rock formations in Australia, China and the US, as well as projects in Qatar, to boost production growth. As much as 40 per cent of the company's capital spending in the next few years has been earmarked for the Asia Pacific region.
Producers including Shell face higher costs following a US clampdown on offshore drilling arising from the oil spill. Shell has the most rigs affected by the ban. Shell is still seeking to dispose of 15 per cent of its refining capacity and is selling retail assets in Africa and Latin America, putting a total of 35 per cent of its current retail markets under review.
Mr Voser is assessing more than 35 projects that may add 8 billion barrels of oil equivalent resources, boosting production until 2020.
Bloomberg
