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The New York Times: Shell Posts Biggest Ever U.K. Company Profit

Published: February 2, 2006
Filed at 2:43 a.m. ET
LONDON (Reuters) – Royal Dutch Shell posted a record profit for a UK-listed company on Thursday, helped by high oil prices and strong refining margins.
The company reported a 3 percent rise in fourth-quarter current cost of supply (CCS) net profit to $5.395 billion, in line with forecasts,
Excluding a net gain of $34 million related to exceptional items, the result was in line with a Reuters poll of 10 analysts which gave an average forecast of $5.385 billion, and up around 13 percent from the post-exceptionals result last year.
Shell (RDSa.L) said production fell to 3.5 million barrels of oil equivalent per day (boepd) in the quarter from 3.84 million boepd in the same period of 2004.
Full-year CCS net profit for 2005 was $22.94 billion, a record for a UK-listed company, analysts said.
The world's third-biggest listed oil firm by market value said it expected to return $5 billion to shareholders by repurchasing stock in 2006, in line with last year's share repurchases.
Shell said its reserve-replacement ratio — the rate at which it matches the oil it pumps with new finds — was 70 to 80 percent, including mineable reserves from Athabasca Oil Sands and year-end pricing impact and acquisitions and divestments.
Companies target a rate of at least 100 percent to avoid depletion of their asset base and the suggestion their business is eroding.
Shell is under pressure from investors for its poor reserve-replacement rate after achieving a ratio less than 50 percent in 2004. Analysts believe this shows Shell will struggle to grow its upstream oil and gas production business in coming years.
Shell said it would pay a dividend of 0.23 euros per share for the fourth quarter.
Shell's result follows record earnings at larger rival Exxon Mobil earlier this week.

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