Amsterdam: Royal Dutch Shell PLC, Europe’s largest oil company, Thursday reported third quarter net profit rose 6.5% from a year ago as increasing production and a rise in oil prices more than offset charges at its refining arm.
The company said net profit of $3.46 billion was up from $3.25 billion in the third quarter of 2009. Revenues rose to $90.7 billion from $75 billion.
“Our results have rebounded substantially from year-ago levels, with improved earnings and cash flow, underpinned by a 5% increase in oil and gas production,” said chief executive Peter Voser in a statement. “This is a better performance from Shell, achieved despite continued difficult industry conditions in refining and natural gas markets.”
Shell took a net charge of $1.41 billion for oil inventory that has fallen in value, mostly at its refining arm, compared to a net gain of $371 million in the third quarter a year ago.
Shell said that stripping out inventory effects, earnings would have risen 18%. Shares rose 0.6% to €22.785 in early trading in Amsterdam.
The company produced 3.06 million barrels of oil and equivalents per day, up 5% from a year ago, as the fifth of thirteen new production projects the company plans to open this year and next came on line.
Shell reported production earnings doubled to $3.15 billion from $1.54 billion, helped by higher oil prices, lower costs as it has cut 7,000 jobs from a year ago, and lower exploration spending.
Global oil prices were up more than 10% from the third quarter of 2009, though Shell did not provide information about its own selling prices.
Meanwhile, Shell’s refining earnings fell to $325 million from $1.29 billion, due mostly to the inventory effect.
On a per-share basis, earnings rose to $0.56 per share from $0.53 per share in the third quarter of 2009. Shell kept its dividend flat at $0.42 cents per share.
The company continues to spend heavily on new investments, with capital spending up 77% to $9.55 billion not quite matched by cash flow from operating activities of $9.0 billion.
Separately, Shell announced the sale of its Finnish and Swedish refining operations to Finnish firm Keele Oy for $640 million, but that did not impact Thursday’s results.