Royal Dutch Shell posted on Thursday net profit of $22,94-billion (€19,03-billion) for 2005, the highest full-year profit figure in British corporate history, as the Anglo-Dutch energy group benefited from record oil prices.
Net profit, excluding gains from the value of its crude oil inventories, soared by 30% last year compared with a profit of $17,595-billion in 2004, the group said in its official earnings release.
Shell, which is recovering from a public relations crisis in 2004 which arose from the mis-statement of its oil reserves, said the surge in profit came despite a drop in production.
Mammoth results from majors like Shell have revived claims that the industry profits at the expense of consumers from high crude prices, which hit historic heights last August after Hurricane Katrina tore through the United States Gulf Coast.
Exxon Mobil, the world’s biggest oil company, had posted on Monday a 43% surge in 2005 net profit to $36,1-billion.
As it accelerates its global hunt for oil, Shell said it was confident of hitting a 100% reserve replacement ratio — the rate at which production was replaced by new oil discoveries — over the next two years. It stood at 70-80% in 2005.
Turning to Iran, the group said it continued to explore potential investments despite a looming nuclear crisis triggered by the Iranian government’s move to resume its nuclear research programme.
“We continue with our study of what we can do there,” chief executive Jeroen van der Veer told reporters, adding that there was no rush to make a “final investment decision”.
Regarding Nigeria, Shell said it would press ahead with its investment plans despite recent violent attacks on its facilities by militants, including the kidnapping of four Shell workers who were released earlier this week.
Shell is the largest oil producer in Nigeria, extracting nearly half of the West African country’s daily output of more than 2,5-million barrels.
The group also said it would meet its output targets despite the lingering effects of the 2005 hurricane season, which damaged and shut down several key US energy facilities.
“We’re still on track with our production [guidance] of 3,8-million to four-million barrels of oil equivalent per day by 2009,” said Malcolm Brinded, head of exploration and production.
Mars, one of the company’s biggest US Gulf Coast platforms, was due to resume operations in the middle of 2006 after being hit by Hurricane Katrina in August, Shell said. Full production at the 150 000-bpd facility was not expected until the second half.
Shell, formed from the union of Royal Dutch Petroleum and Shell Transport and Trading last July, saw the price of its ‘B’ shares slide 1,50% to 1 975 pence, while its ‘A’ shares slipped 1,26% to 1 887. The capital’s FTSE 100 index meanwhile dipped 0,18% to 5 791,30 points.
Traders said that the results from the group for the fourth quarter fell short of consensus forecasts.
Shell generated net profit of $5,395-billion in the three months to the end of December — an increase of 3% from the same period one year earlier, compared with forecasts of $4,850-$6,175-billion.
On average, the company produced the equivalent of 3,518-million barrels of oil equivalent per day during 2005, a slight decline compared with 3,772-million bpd in 2004.
Excluding the impact of the hurricanes, the end of a production sharing contract in the Middle East and asset disposals, volumes would have reached 3,738-million barrels of oil equivalent per day, Shell added.
In the fourth quarter, production stood at 3,5-million bpd, compared with 3,867-bpd a year earlier.
Shell also said it would invest $19- billion in 2006 and spend $5-billion buying back its own shares to boost returns to shareholders.
Royal Dutch Shell’s results come following a year in which oil prices hit historic records in August, striking $70,85 per barrel in New York and $68,89 in London in the wake of Katrina.
The energy giant has also moved to a more traditional single-board structure with one chairperson and one chief executive, scrapping its dual-board arrangements in Britain and The Netherlands.
Shell had shocked investors in 2004 by declaring it had overstated oil and gas reserves and that senior executives were aware of problems long before they were made public. – AFP