Oil giant Royal Dutch Shell today announced a 26% increase in adjusted net profits for the second quarter - a period when oil prices reached record high points above $60 a barrel.
Net income in the three months to June rose to $4.626 billion compared with $3.663 billion during the same period a year earlier. Analysts' had forecast profit in a range between $4.54-5.90 billion and a consensus figure of $5.38 billion.
'Our good earnings and cash generation can be used for dividends, investments and share buybacks,' CEO Jeroen van der Veer said.
Royal Dutch Shell said it would increase exploration spending to $1.8 billion annually in 2005 and 2006, though the budget across the group would remain at $15 billion this year.
During the second quarter of this year, oil prices hit a historic high point of $60.95 in New York trading as speculators seized on supply concerns ahead of the northern hemisphere winter. They have since hit a fresh record of $62.10, as tropical storms threatened to bear down on US oil production facilities in the Gulf of Mexico.
Royal Dutch Shell ended a century of tradition earlier this month after merging the Anglo-Dutch group's two holding companies in the wake of an internal crisis caused by the miscalculation of the group's energy reserves. Royal Dutch Shell has moved to a more traditional single-board structure with one chairman and one chief executive after scrapping its dual-board arrangements based in Britain and the Netherlands.
Shell said today that production stood at 3.526 million barrels of oil equivalent per day during the second quarter, compared with 3.578 million a year earlier. It reaffirmed its production guidance of between 3.5 and 3.8 million barrels of oil equivalent per day in 2005 and 2006 and of between 3.8 and 4 million boepd in 2009.
The group's interim results came in two days after British rival BP saw its net profit jump by 29% to $4.981 billion during the second quarter.
Meanwhile, Royal Dutch Shell and Russian gas monopoly Gazprom are proceeding with plans to exchange major assets in Russia despite the
massive cost overruns at the giant Sakhalin II gas project, Van der Veer said today.
However, he acknowledged that the group 'must improve' its management of the project. Earlier this month Shell said that its Sakhalin II gas project could end up costing $20 billion, double the amount first estimated two years ago.
The Anglo-Dutch group blamed currency swings and rising prices of commodities for revising the cost of the project, which will help satisfy rising energy demand in Asia with gas found off Russia's eastern coast.
