Fri, Oct 29, 2010 - Page 10 News List

Shell outperforms Q3 forecasts, jumps 18%

UNSUSTAINABLE PRICES:Shell and ConocoPhillips were both helped by a 12 percent increase in oil prices over last year’s third quarter, but the boost isn’t expected to last

Reuters and AP, LONDON and NEW YORK

Royal Dutch Shell PLC beat all analyst forecasts by reporting an 18 percent jump in third-quarter profits thanks to higher oil and gas prices, setting a trend for the sector.

Europe’s largest oil company by market value said current cost of supply (CCS) net income was US$3.52 billion in the period.

Stripping out non-cash charges and one-off items, the result soared 88 percent to US$4.93 -billion, well ahead of an average forecast of US$4.29 billion from a Reuters poll of nine analysts.

ConocoPhillips, the third-largest US oil company, said on Wednesday that its quarterly profit more than doubled.

The Houston oil company reported net income of US$3.06 billion, or US$2.05 per share for the third quarter. That compares with US$1.47 billion, or US$0.97 per share, in the year-ago period. Excluding gains from asset sales and other special items, Conoco made US$2.23 billion, or US$1.50 per share, in the third quarter.

Both companies were helped by a 12 percent rise in crude prices compared to the third quarter of last year, while US natural gas prices were 29 percent higher and British gas prices doubled. Average global refining margins also rose.

Industry leader Exxon Mobil was to report its third-quarter results later yesterday and analysts have forecast a 53 percent rise in net income to US$7.26 billion. Chevron reports today.

Shell also contributed to its rebound, with a 5 percent rise in oil and gas production in the quarter compared to the same period of last year, to 3.1 million barrels of oil equivalent per day, just ahead of forecasts.

However, the main outperformance versus expectations was in Shell’s refining unit, where underlying profits were around 50 percent higher than analysts predicted.

Chief executive Peter Voser said Shell would continue to sell non-core assets, especially in retail and refining, and promised a “rationalization” of the -Anglo-Dutch company’s US tight gas assets in North America.

At Conoco, the company saw increased profits in the third quarter in its production, pipelines, chemicals and refining businesses. However, historically low natural gas prices continue to make gas wells less profitable and Conoco said it has started to cut back on natural gas production.

“The prices you see today are really unsustainable,” Conoco chairman and CEO Jim Mulva said in a conference call with Wall Street analysts.

Conoco will look for prices to increase before it turns back to natural gas, he said.

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