ROYAL Dutch Shell Plc and BP Plc, Europe's two largest oil companies, have reported a record profit after crude surged above US$100 a barrel and natural gas prices rose.
Shell had its biggest gain in London trading in almost three years after saying in a statement yesterday that first-quarter net income jumped 25 percent to US$9.08 billion. BP rose the most in nearly 6 years as profit soared 63 percent to US$7.62 billion. Excluding changes from holding inventories and one-time items, both companies beat analysts' estimates, according to Bloomberg News.
Oil reached $111.80 a barrel in March as a tumbling dollar spurred investors to buy commodities, while natural gas increased by an average 22 percent. Output rose at Shell and BP, helping to counter falling margins from refining. Crude touched a record US$119.93 in New York on Monday.
"What a great set of results," said Jason Kenney, an Edinburgh-based analyst at ING Wholesale Banking. "The numbers are strong on the operational side." Kenney has a "hold" recommendation for BP and Shell.
Excluding changes from holding inventories and one-time items, Shell's profit was US$7.85 billion, beating the US$6.88 billion median estimate of eight analysts surveyed by Bloomberg. BP's profit on the same basis advanced to US$6.49 billion, above the eight-analyst median estimate of US$5.26 billion.
Shell A shares in London climbed as much as 6 percent to 2,057 pence (US$40.71), trading at 2,054 pence. BP rose as much as 5.8 percent to 612 pence in London trading and was at 611 pence.
The gain for Shell was the biggest since July 2005 and for BP, since October 2002.
ConocoPhillips, the third-largest US oil company, said last Thursday that its first-quarter profit rose 17 percent to US$4.14 billion as crude and gas prices gained. Exxon Mobil Corp, the world's biggest oil company, reports its earnings on May 1, with US No. 2 Chevron Corp a day later.
Shell Chief Executive Officer Jeroen van der Veer, 60, and scheduled to retire on June 30, 2009, relied on increasing natural gas production to make up for slumping crude output.
The Hague-based company said yesterday that total stopped Shell production in Nigeria is 164,000 barrels a day. Overall production increased to more than 3.52 million barrels of oil equivalent a day.