Shell profits nearly double

Anglo-Dutch oil giant Royal Dutch Shell said profits nearly doubled in the second quarter compared to the same period last year.

By late afternoon shares were 22p higher at £17.29 as investors warmed to the better than expected profits in the second quarter.

The group reported a 94% rise in profits to $4.5 billion compared to $2.3 billion a year ago, although down from $4.8 billion in the first quarter.

Excluding one-off gains the group reported a profit of $4.2 billion - 5% ahead of market expectations.

The number was buoyed by a 56% jump in the oil price compared to the first half of 2009 and increased production. 

Fred Lucas, analyst at JP Morgan, said Shell investors have grown accustomed to such a strong performance and today's result is unlikely to prompt forecast upgrades as the profit is equal to 49% of the market consensus for the full year.

He also said that numbers from BG, Italy's ENI and US group ConocoPhillips had all beaten expectations by an even higher percentage over recent days. 

Chief Executive Officer Peter Voser said the group was 'delivering' on its strategy after its 2009 restructuring program was completed six months ahead of schedule, leading to underlying cost savings of $3.5 billion, 15% more than the group’s target.

The group has increased oil and gas production by 5% in the quarter whereas most competitors will have seen production fall in the same period.

On Tuesday embattled peer BP said its production had fallen 4%.

Analysts had been expecting Shell to be one of just a handful of companies that would lift production but the 5% increase was around double the consensus forecast. Chief financial officer Simon Hendry said he was hopeful that Shell could grow production over the year as a whole.

Looking forward Voser said the global economic outlook looks uncertain but said Shell will continue to build itself into a more focused group, announcing plans to raise $7-8 billion from asset sales in 2010-11 as it accelerates its disposal plans.