Iraq factor lifts Shell to record first-quarter profits of $3.9bn

<a href=news.independent.co.uk>news.independent.co.uk By Liz Vaughan-Adams 03 May 2003

The oil giant Royal Dutch/Shell yesterday joined its industry rivals in posting a record set of profits for the first quarter of the year after the war in Iraq sent crude prices soaring.

The Anglo-Dutch group unveiled an adjusted profit of $3.9bn (£2.4bn) for the first three months – a 96 per cent increase from the $1.9bn recorded in the same period a year before.

Crude oil prices soared in the first quarter with Brent prices averaging $31.50 a barrel, up from $21.15, although the group also benefited from strong US natural gas prices.

"It's a strong performance in an exceptional quarter," a spokesman said, noting the companyalso benefited from increased oil prices due to strikes in Venezuela and unrest in Nigeria.

Royal Dutch/Shell's profit figure, which excluded a $1.3bn gain from selling its 14.75 per cent stake in Germany's Ruhrgas to the utility E.ON, was far ahead of the $3.7bn consensus forecast.

The company is the latest in a line of oil giants to have reported bumper profits on the back of the sharp rise in oil prices. Earlier this week, BP unveiled a $3.7bn profit in the first quarter, or $41m a day, more than double the $1.6bn made for the same period last year while Exxon Mobil's profits more than tripled from a year before.

The US oil group ChevronTexaco also reported bumper first-quarter figures yesterday with record net income of $1.9bn – more than double that achieved the year before.

Royal Dutch/Shell, which last year bought Enterprise Oil, said it produced 4.2 million barrels of oil equivalent a day – a 6 per cent rise from last year.

Shares in the group closed up 3.3 per cent at 384.5p with analysts pointing to a weaker second quarter since oil prices have since fallen. Crude fell to below $25 a barrel this week.

Sir Philip Watts, Shell's chairman, described the performance as "strong and highly competitive". "These results demonstrate the ability of Shell's uniquely well-balanced portfolio to produce impressive earnings and strong cash generation. We have a clear strategic direction for what we believe is the best portfolio in the sector and we continue to deliver value for our shareholders," he said.

The company remained tight-lipped, however, on the timing of the possible restart of its share buyback programme. It has previously indicated that a share buyback programme was unlikely in the first half of the year.