Royal Dutch Shell Group .com Rotating Header Image

Daily Telegraph: Shell sets $20bn-plus profits record

By Sylvia Pfeifer (Filed: 29/01/2006)
Royal Dutch Shell, the Anglo-Dutch oil giant, is on course to set a British corporate record when it reports post-tax annual profits of about $23bn (£13bn) on Thursday.
Industry analysts forecast that Shell will announce adjusted net profits for the fourth quarter of $5.4bn, fuelled by high oil prices, which last week hit $66 a barrel. The forecast represents a 14 per cent rise from the $4.72bn Shell made during the same period last year.
Even if its earnings are half the level forecast, the oil giant is set to become the first UK-listed company to report annual profits above the $20bn mark and break its own record of $17bn last year.
The bulk of these record profits are likely to be reinvested as the industry struggles to find new oil and gas reserves. Last month the company raised its annual spending forecast by 27 per cent to $19bn, citing increasing costs and the need to find new reserves.
Jeroen van der Veer, Shell's chief executive, said the company would consider making acquisitions of up to $10bn (£5.6bn) in order to increase its proven oil and gas reserves.
“Even in times of high oil prices it's possible, but not sure, that you may do small acquisitions or swaps of up to $10bn,'' he said at the World Economic Forum in Davos.
He would not comment on possible targets, but the most likely strategy is for Shell to consider asset swaps or to buy oilfields because few groups in the industry are now worth less than $10bn.
Investors, however, are also in line to benefit from the profit bonanza. Last year Shell pledged to return $5bn to shareholders via a share buyback- at the higher end of previous expectations. Analysts expect the payout to remain at that level for the foreseeable future. At its third quarter results last year, the company also announced an interim dividend of €0.23 per share for the quarter.
Shell's stellar performance over the past 12 months is in marked contrast to the problems it faced two years ago when it admitted that it had overstated its proven oil and gas reserves.
The scandal led to the departure of its three most senior executives, including Sir Philip Watts, the chairman. It also acted as a catalyst for the wholesale shake-up of the group and prompted the historic merger of its two operating companies, Shell Transport & Trading and Royal Dutch Petroleum.
The company has paid more than $150m in fines imposed by US and British regulators over the reserves scandal. Last year it paid $90m to settle claims brought by its US employees, who also claimed that their pension fund had been hit by the reserves restatements.
Nevertheless, Shell is not out of the woods yet. Earlier this month, in a separate development, 26 mostly Dutch pension funds launched an action against the group for overstating its oil reserves between 1999 and 2003.
Led by ABP, Europe's largest retirement fund, the pension funds have withdrawn from a class-action lawsuit in the US and launched their own claim in a New Jersey court for several hundred million dollars.

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Comments are closed.