May 2, 2003, 10:08PM Houston Chronicle News Services

Royal/Dutch Shell Group and ChevronTexaco said Friday that first-quarter profits more than doubled, capping a week of record oil earnings, because prices surged amid war in Iraq and supply disruptions in Nigeria and Venezuela.

Shell, Europe's largest oil company by market value, said net income jumped to $5.33 billion from $2.26 billion in last year's first quarter. At ChevronTexaco, the No. 2 U.S. oil company, profit rose to $1.92 billion from $725 million. Sales climbed 53 percent at Shell and 46 percent at ChevronTexaco.

The combined first-quarter profits at the two companies and rivals Exxon Mobil and BP tripled to $17.8 billion as crude-oil prices climbed to a 12-year high and refining margins widened. Prices have since fallen by a third, signaling lower earnings to come.

In other earnings:

· UAL, the bankrupt parent of United Airlines, on Friday reported the biggest quarterly shortfall of any major U.S. air carrier as the war in Iraq discouraged travel and raised fuel costs.

The $1.3 billion net loss topped that of rival AMR Corp. parent of American Airlines, which posted a $1 billion first-quarter loss last week and narrowly averted bankruptcy for the third time.

· Cigna said a strong performance from many of its employee benefits programs helped offset health plan membership declines and maintain first-quarter net income above expectations. · Unilever posted a 2 percent rise in first quarter profit, but the maker of Lipton Tea, Hellman's Mayonnaise and Dove soap said it had missed its own sales targets after weaker-than-expected demand in the beginning of 2003.

<a href=www.thescotsman.co.uk>The Scotsman JAMES ASHTON SENIOR CITY CORRESPONDENT ROYAL Dutch/Shell yesterday became the latest oil major to report record profits on the back of soaring oil prices in the run-up to the war in Iraq.

The British-Dutch company reported underlying profits up 96 per cent to US$3.91billion (£2.44 billion) - or £312 every second - in the first quarter of 2003.

The result was above analysts’ expectations and follows a glut of huge profits from its peers.

Earlier this week, BP reported net profits up 136 per cent to $3.73bn (£2.35bn) as oil prices touched 12-year highs. And US firm ChevronTexaco said yesterday that it more than doubled its profits in the same period to $1.92bn (£1.2bn), while its larger peer ExxonMobil tripled its contribution.

Oil prices jumped 48 per cent compared with a year earlier to $31.50 per barrel, boosted by war in Iraq, strikes in Venezuela and civil unrest in Nigeria.

Natural gas prices were also up significantly during the period and refining margins were boosted by a tightening of the global balance between supply and demand.

The shares were up 12.25p, or 3.3 per cent, in London.

Investors have come to expect a forecast-beating figure from the company, but are more concerned about the current outlook. Crude fell this week below $25 per barrel from an average of more than $30 in the quarter, as markets anticipate increased supplies after the war and sluggish demand growth.

Peter Hitchens, an analyst at French stockbroker Cheuvreux, said: "If they hadn’t been at the top of the range that would have been a disappointment.

"The problem is, that’s history, and now the oil price is the issue."

Despite a run of huge profits, Royal Dutch shares have dropped 35 per cent and Shell 21 per cent in the past year - among the largest falls of the world’s top oil stocks - as investors anticipate lower crude prices this year.

Shell bought out Enterprise Oil, the North Sea exploration and production business last year, helping production rise 6 per cent in the quarter to 4.2 million barrels.

But the acquisition has not been enough to dispel ongoing concerns specific to the world’s second-largest oil firm about near-zero underlying output growth, and oil and gas reserves that are running out faster than new finds can be booked.

Underlying growth was flat, in line with recent forecasts from the company for 2003.

Shell officials said that its plan for 4.1 million barrels a day of output this year was on track and reaffirmed a 3 per cent long-term output growth target.

Some of Shell’s production was shut in Nigeria and about 150,000 barrels per day of its West Nigeria Delta joint venture remains closed.

Excluded from the adjusted figure was the impact of a $1.7bn (£1.05bn) gain from the sale of 14.75 per cent stake in German gas distributor Ruhrgas to German utility E.ON.

<a href=www.dailytelegraph.co.uk>dailytelegraph.co.ukBy Malcolm Moore (Filed: 03/05/2003)

Shell became the latest oil company to benefit from the high oil prices caused by the war in Iraq, as it posted record results for the first three months of the year.

The oil major announced adjusted current cost of supplies earnings of $3.9 billion (£2.5 billion) for the first quarter. The total strips out the $1.3 billion Shell received for its stake in Ruhrgas, and adjusts the figures for the changing value of Shell's inventories.

"This is an exceptional income for us at a very strong oil price environment," a spokesman said. "Obviously that may or may not change. I don't have a crystal ball but what is important for us is how we take our business forward."

The high price of oil, which peaked at over $34 a barrel in London in March, also helped BP earn a record $4.27 billion in the first quarter, while ExxonMobil made a record first quarter net profit of $7.04 billion.

But yesterday, the price of Brent crude for June delivery stood at $23.58. This change in conditions makes it is unlikely for strong results to continue next quarter. As one analyst at Goldman Sachs commented: "Nice results, shame about the outlook." Analysts said that since the price peaked in March, the oil sector has underperformed the market by 11pc.

Shell offset problems with production in Nigeria and Venezuela by reporting not only a large increase in earnings in exploration and production, but also a 118pc improvement in its natural gas earnings and a 139pc rise in its oil products income.

By Melissa Davis Staff Reporter 05/02/2003 11:26 AM EDT

Former underdog ChevronTexaco (CVX:NYSE - news - commentary - research - analysis) is starting to look like big oil's hottest star.

After a series of misfires -- including a disastrous shot at energy trading -- ChevronTexaco jumped past some sizzling competitors to deliver the biggest upside surprise of the quarter.

The energy giant, which became the nation's second-largest oil company through a merger in 2001, reported first-quarter profits of $1.99 per share that toppled Wall Street expectations by 18 cents. All together, the company reported first-quarter profits of $1.92 billion that more than doubled profits of $725 million one year ago.

The stock jumped $1.10 to $64.10 on the news.

"They had everything going against them last year," said Fahnestock analyst Fadel Gheit, who recommends buying the stock and owns shares in the company himself. "But now, they're firing on all cylinders. They did much better than the other majors."

West Is Best

Like its competitors, ChevronTexaco benefited from soaring energy prices pushed higher by the war in Iraq and disruption in Venezuela. But the company's success was amplified by its industry-leading leverage to both energy prices and refinery margins in the West Coast. Those same focuses, combined with a doomed foray into energy trading, hammered ChevronTexaco during the unfavorable conditions that followed the company's merger.

A year ago, Gheit said, ChevronTexaco was reeling from hurricane damage in the Gulf of Mexico, government blackmailing in foreign locations and -- most notably -- a bad $3 billion bet on energy trader Dynegy (DYN:NYSE - news - commentary - research - analysis).

"Investor confidence has been shot," he admitted. "Hopefully, they're on the right track now."

CEO Dave O'Reilly insists that's the case. He pointed to ChevronTexaco's recent quarter as evidence of a turnaround.

"The first quarter's financial results were the best since our merger in late 2001," O'Reilly said. "Taken together, the first quarter financial results, our recent operational successes and the longer-term initiatives combine to underscore our company's solid foundation and the significant potential to create value for our stockholders."

Running the Table The company's performance improved almost across the board during the quarter. Overall sales surged 47% to $31 billion. Upstream profits, generated from exploration and production, jumped 73% to $1.97 billion. Meanwhile, the company's refinery unit -- where margins can be hurt by higher oil prices -- actually swung from a $61 million loss to a $315 million profit.

Only ChevronTexaco's chemical division, which generally contributes less than 5% to the company's bottom line, weathered a drop-off. There, profits tumbled from $15 million to $3 million during the quarter.

"Chemicals are universally weak right now," Gheit explained. "But they'd rather take that any time. They're happy to get the higher [energy] prices."

Meanwhile, the company continues to benefit from merger-related synergies. So far, Chevron and Texaco have saved $2 billion by combining forces.

But despite the company's progress, the stock continues to languish. The shares actually commanded 30% more during ChevronTexaco's difficult period a year ago.

Still, Gheit believes the stock could jump 20% to a fairer valuation of $75 a share. In the meantime, he points out that ChevronTexaco pays the highest-yielding dividend of the majors.

Roughly half of the analysts following ChevronTexaco recommend that clients buy the stock. On average, analysts expect the stock to go to $70 a share.

Shares of Chevron were trading at $64.71, up $1.71, or 2.71%.

Fri May 2, 2003 08:26 AM ET By Steve Slater

LONDON, May 2 (<a href=reuters.com>Reuters) - A sharp fall by Anglo-Dutch consumer products giant Unilever ULVR.L helped cut gains for Britain's leading shares on Friday, as investors continued to fret about the brittle economy.

But support was provided by strong oil stocks after record profits from Shell SHEL.L and firm drugs stocks such as Shire Pharmaceuticals SHP.L after this week's buoyant results.

By 1200 GMT the FTSE 100 index .FTSE was up 13.1 points, or 0.3 percent, at 3,893.2, back from an early peak of 3,911.1. Volume was light ahead of a three-day UK holiday weekend and doubts about near-term direction.

Unilever shares fell 6.8 percent after the company reported a slim two percent rise in first-quarter profits and said earnings and sales of its top brands fell short of forecasts -- hit by poor sales in March, especially in North America.

Analysts said the figures heightened the twin concerns that consumer spending has slowed and corporate earnings growth in the first quarter has mainly been on the back of reduced expectations and cost cutting, rather than underlying growth.

"There's still caution about earnings forecasts for this year and next. While that scepticism prevails, investors will be quite cautious about re-rating markets that are already trading above long-term averages," said Alex Scott, analyst at Seven Investment Management.

Scott said a rally by equities in April was achieved despite continued weak economic data. "Unless we see a pick up soon it will be hard for markets to pick up from here," he said.

After weaker-than-expected U.S. manufacturing and jobs numbers and signs of a cooling in the UK housing market, the release of U.S. non-farm payroll data at 1230 GMT is likely to dictate the early mood on Wall Street.

BUMPER OIL, DRUGS PROFITS

Shell was the latest oil major to report record quarterly profits, as the war in Iraq, civil unrest in Nigeria and strikes in Venezuela stoked crude oil prices.

Shell added one percent after its first quarter net profit adjusted for one-off items almost doubled to $3.9 billion, above the range of analysts' expectations. BP BP.L rose 0.9 percent.

But defence contractor BAE Systems BA.L fell 4.6 percent, which dealers came after stockbroker Cazenove cut its rating on the company to "reduce".

Among smaller companies, holiday firm MyTravel MT.L leapt 30 percent after it reported a drop in bookings but said it saw signs of recovery as war in Iraq ends, which also helped lift First Choice FCD.L shares three percent.

(Additional reporting by Keiron Henderson)