Royal Dutch Shell bucked an industry-wide trend of falling earnings today, posting a 20 per cent rise in second-quarter profits to $7.556 billion, as fat refining margins helped outweigh lower output.
Shell said in a statement that the rise in its current cost of supply (CCS) profit, which strips out changes in the value of inventories, was helped by a non-operating gain of $660 million.
Foxhall Shell garage in Dublin.
Excluding this gain, underlying profits rose 5 per cent to $6.896 billion, beating an average forecast of $6.770 billion given in a Reuters poll of 10 analysts.
It is the eighth straight quarter when the world's second-largest, non-government controlled oil company by market value has beaten analysts' forecasts, suggesting it has turned the corner after difficult years when it admitted overstating reserves and announced multi-billion cost overruns on key fields.
Shell's London-traded A shares were up 1.1 per cent at 1990 pence at 7.11am, outperforming a 0.66 per cent rise in the DJ Stoxx European Oil and Gas sector index.
The company said production of oil and gas fell 2 per cent to 3.178 million barrels of oil equivalent per day, in line with analysts' expectations, partly due to Nigerian fields being shut in because of security problems and a warm winter in North West Europe, which hit demand for North Sea gas.
High oil prices underpinned the results although realisations were in line with the levels achieved in the same period last year.
Refining division earnings jumped over 40 per cent thanks to high margins and better fuel retail margins. Analysts at Cazenove described the refining result as "very strong".
Hague-based Shell's result compares with big drops in underlying second-quarter earnings at BP, Italy's ENI SpA and Spain's Repsol.
However, Chief Executive Jeroen van der Veer warned higher industry costs could keep up the pressure on profits.