Oct. 30 (Bloomberg) -- Royal Dutch Shell Plc, Europe's biggest oil company, said third-quarter profit climbed 22 percent as record crude oil prices offset production cuts in Nigeria and the Gulf of Mexico.

Net income advanced to $8.45 billion from $6.92 billion a year earlier, the company said today in a statement. Excluding gains or losses from inventories and one-time items, profit was $8.04 billion, with gains of $800 million in additional fair- value adjustments. The median estimate of 10 analysts surveyed by Bloomberg was $7.22 billion. Shell fell 3.2 percent in London trading, after rising 12 percent yesterday to a five-week high.

Earnings were boosted by crude's surge to a record high of $147.27 in New York on July 11. Oil has since slumped more than 50 percent. Militant attacks in Nigeria forced Shell to shut in production and Hurricanes Gustav and Ike swept through the Gulf of Mexico, leading to the shutdown of platforms.

``The downstream results are particularly strong compared to others in the sector and upstream was also better than expected,'' Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh who has a ``buy'' rating on the stock, said in a telephone interview today.

Production Declines

Third-quarter crude and natural-gas output fell 6.6 percent and dropped to below 3 million barrels of oil equivalent a day for the first time in more than a decade. Total production, including bitumen from oil sands, was 2.93 million barrels of oil equivalent a day, down from 3.14 million barrels a year earlier. That missed the estimate of 2.95 million barrels, according to a Bloomberg News survey of six analysts.

The last time The Hague-based Shell reported daily production of less than 3 million barrels was in 1991, according to a research note of Sanford Bernstein & Co on Oct. 21.

Shell's London-listed Class A shares fell as much as 55 pence, or 3.2 percent, to 1,650 pence and were trading at 1,659 pence at 9:07 a.m. local time.

``Shares of the oil majors have rebounded sharply over the past 10 days,'' said Bertrand Hodee, an analyst at Kepler CM with a ``buy'' rating on Shell, by telephone from Paris. Investors in oil stocks are selling because ``they want to take their profit.''

Shares of Shell have gained 10 percent in the past two weeks, compared with a 2.8 percent gain of the 40-company Dow Jones Europe Stoxx Oil & Gas Index of which Shell is a member.

As of yesterday's close, Shell was down 19 percent this year. That compared with an 18 percent decline for BP Plc, Europe's second-biggest oil producer, which this week reported a third-quarter profit of $8.88 billion, more than the $6.82 billion median estimate from 10 analysts in a Bloomberg survey.

New Chief

Shell said yesterday Chief Financial Officer Peter Voser will take over as chief executive officer in July. Voser, 50, will succeed Jeroen van der Veer, who is due to retire. Van der Veer, 61, stayed on beyond the normal retirement age in the Netherlands after restoring investor confidence at the company following a reserves scandal in 2004.

Shell announced an interim dividend in the third quarter of 40 cents per A and B ordinary share, an increase of 11 percent over the comparable dividend for the year-earlier quarter. The dividend payment is as expected, Kenney of ING said.

Unconventional Projects

Exxon Mobil Corp., the world's biggest energy company, may later today report a record third-quarter net income of $11.9 billion, according to average estimates from analysts surveyed by Bloomberg. That would top Exxon Mobil's own record for the highest quarterly profit by a U.S. company without one-time gains.

Of the 35 analysts tracked by Bloomberg who cover Shell, 23 recommend buying the shares, eight advise holding the stock and four say ``sell.''

Shell plans to counter lost production in Nigeria and Russia by mining Canadian oil sands and developing a Qatari gas- to-liquids venture. The ``unconventional'' projects are designed to replace aging fields as high oil prices encourage energy-rich nations to hold onto a bigger slice of their resources. The company's output has fallen in the past five years.

BP's Global Indicator Margin, a broad measure of refining profitability, averaged $8.03 a barrel in the third quarter, unchanged from a year earlier, according to BP's Web site.

(Shell will hold a Webcast presentation, starting at 2 p.m. London time. To register and listen go to http://www.shell.com/home/content/investor-en. )

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

Last Updated: October 30, 2008 05:33 EDT