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Daily Star: Shell bonanza: Shell OIL GIANT IN £8.5BN PLEDGE

Feb 3rd, 2006
by admin.

By BILL MARTIN
OIL giant Royal Dutch Shell is looking to return more than £8.5 billion to shareholders after reporting record year-end profits.
Chief executive Jeroen van der Veer said the company will return £5.5bn through an above-inflation rise in its dividend payout. And he pledged a further £3bn through a share buyback. The promise came as the company unveiled a 30% hike in underlying profits from £l0bn to £13bn for the year to December.
Profits were driven by high oil prices, which sent profits in the group's exploration and production division soaring by 45% to £7.9bn, despite a drop in production from 3.8m to 3.5m barrels of oil a day hit by the Gulf of Mexico hurricanes.
“We had good results last year,” said van der Veer. “We do realise oil and gas prices were high, but we had a good operational performance and made our production targets.” He insisted the company has not profited at the expense of British motorists, pointing out that the UK is one of the most competitive markets for selling petrol.
Shell made less than 10% of its total profits in the UK, which also include gas and oil production interests in the North Sea, and had paid UK taxes of £675m.
Despite the record profits, the City was not happy. Analysts said Shell had failed to repeat Exxon Mobil's achievement in beating forecasts when reporting £20bn year-end profits earlier this week. More serious concerns were also expressed by Shell's failure to replace all the reserves it pumped out of the ground last year.
The company said its so-called reserves replacement ration was between 60% to 70%. Exploration chief Malcolm Brinded said he had only “reasonable confidence” that the company will hit a target of 100% reserves, replacement ratio by 2008.
Shell shares fell 49p to 1956p. Analysts say Shell is also having to deal with rising labour and equipment costs – plus the fact that new oil discoveries are harder to extract because they are in sand, shale or beneath deep water.
Shell promised to invest more money in “green” energy options such as solar, hydrogen and wind power.

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