Shell First-Quarter Profit Rises on Higher Crude Prices, Beating Estimates

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, said profit rose 30 percent in the first quarter as crude prices gained and refining earnings doubled.

Excluding one-time items and inventory changes, Shell earned $6.3 billion compared with $4.8 billion a year earlier. Analysts expected $6.2 billion, according to the mean of nine estimates in a Bloomberg survey. Production slipped 3 percent to 3.5 million barrels of oil equivalent a day and was in line with last year’s output once asset sales are excluded.

Chief Executive Officer Peter Voser aims to bolster output to 3.7 million barrels a day by 2014 on projects such as the Pearl gas-to-liquids and Qatargas 4 liquefied natural-gas ventures in the Middle East. Last month, he pledged a further $1 billion in cost cuts after weaker margins caused earnings to miss analyst estimates at the end of 2010.

“Shell has delivered a top-end set of first-quarter figures,” said Lucy Haskins, an analyst at Barclays Capital in London.

Shell’s Class A shares rose 0.6 percent in London to close at a record 2,322.5 pence at 4:30 p.m. local time.

Net Income Gains

Shell’s net income rose 60 percent to $8.78 billion, or $1.42 a share, from $5.48 billion, or 89 cents, in the year- earlier period. Revenue increased to $109.9 billion from $86 billion a year ago.

BP Plc (BP/) said yesterday adjusted profit fell 4 percent on lower output after the sale of more than $24 billion in assets to help pay for the Gulf of Mexico oil spill. Exxon Mobil Corp. (XOM), the world’s biggest company, reports earnings later today.

Brent oil averaged $105.52 a barrel in the first quarter, 36 percent more than the year-earlier period. Shell’s adjusted refining profit rose to $1.65 billion from $778 million last year because of higher utilization rates at some of its plants.

Shell reversed a seven-year drop in production last year after starting projects in Brazil, Nigeria, Canada and the Gulf of Mexico. The company plans to invest $100 billion in projects in four years through 2014 to maintain output growth through the end of the decade. Start-ups contributed to 230,000 barrels a day of output in the first quarter, the company said today.

“We continue to make good progress in implementing our strategy, improving near-team performance, delivering a new wave of production growth and maturing the next generation of growth options for shareholders,” Voser said in a statement.

Photographer: Simon Dawson/Bloomberg

Peter Voser, chief executive officer of Royal Dutch Shell Plc. Close

Peter Voser, chief executive officer of Royal Dutch Shell Plc.

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Photographer: Simon Dawson/Bloomberg

Peter Voser, chief executive officer of Royal Dutch Shell Plc.

Pearl GTL, Qatargas 4

Shell will start Pearl gas-to-liquids and Qatargas 4, two of 20 new projects that it expects to add 800,000 barrels of oil equivalent a day to production by 2012. LNG volumes rose 4 percent in the first quarter from a year earlier.

“Shell is getting their main capital projects ramping up,” said Jason Gammel, an analyst at Macquarie Capital Ltd. in London. “It’s all execution for them now. We’re looking for a couple of good earnings quarters to drive the stock price.”

Shell sold $3.2 billion of assets in the quarter, including gas fields in Texas as well as producing fields in Canada, Pakistan and the U.K.

Refining margins improved to $11.02 a barrel in the first quarter from $9.98 in the last three months of 2010, according to BP’s refining marker margin published on April 14. Shell said that refinery availability improved to 92 percent in the first quarter from 89 percent a year earlier.

BP expects production to fall 11 percent to about 3.4 million barrels a day of oil equivalent this year, partly after delaying projects in Alaska and the Gulf of Mexico following the worst oil spill in U.S. history.

Shell Chief Financial Officer Simon Henry said the company had lost between 25,000 and 30,000 barrels a day of production in the first quarter because of the Gulf of Mexico drilling moratorium imposed after the spill.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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