Royal Dutch Shell said yesterday its profits jumped in the third quarter after it benefited from higher oil prices and a 5% rise in production.
The group posted pre-tax profits of £2.2billion for the three months to September 30, an increase of 18% on a year earlier, although this was down on the second-quarter profit haul of £2.83billion.
The figure, which exceeded City forecasts, also reflected progress on Shell’s £2.2billion cost-saving plan, which has cost 7,000 jobs.
Chief executive Peter Voser said: “Our results have rebounded substantially from year-ago levels, driven by some improvement in industry conditions, and Shell’s strategy. We are making good progress against our targets, and there is more to come from Shell.”
Profits were helped by higher oil and gas prices than in 2009, when much of the global economy was still in recession.
Upstream exploration and production profits more than doubled on a year ago to £2billion, but refining earnings were sharply lower as a result of continued difficult industry conditions.
In contrast to BP, which has stopped paying dividends in the wake of the Gulf of Mexico disaster, Shell said it paid £1.6billion to its shareholders during the third quarter.
Shell lagged behind BP in its response to the economic downturn, but Mr Voser said it was making good progress in implementing its strategy, including up to £5billion of asset sales as it refocuses its portfolio on projects with higher growth potential. The company said its production during the period was 3.05million barrels of oil equivalent per day (boepd).
Tony Shepard, of broker Charles Stanley, said profits were 10-15% better than market expectations and provided some encouraging signs that Shell’s strategy and performance improvement was on track.
He added: “The share price has underperformed the wider stock market by 7% over the last 12 months but we believe that this underperformance could reverse as the group begins to deliver on its strategy.”
With new projects due for start-up in the current financial year, Mr Shepard said group oil and gas production could reach 3.5million boepd by 2012, a rise of 11% over 2009.
Canadian oil and gas operator Nexen, whose interests in the UK North Sea include the giant Buzzard field and three operated discoveries in the Golden Eagle area, where it has estimated recoverable resources of 150million barrels of oil equivalent, said yesterday it was advancing development plans for Golden Eagle.
Nexen posted net income of £329.7million for the three months to September 30, up from £74.9million a year earlier. Sales for the period were £877.38million compared with £673.54million the year before.