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THE NEW YORK TIMES: Earnings Top Forecasts at Shell and Total

Earnings Top Forecasts at Shell and Total

Published: May 5, 2006

The oil companies Royal Dutch Shell and Total said yesterday that their first-quarter profits rose, beating analysts' forecasts, as near-record oil prices compensated for declining production and higher taxes.

Net income at Shell increased 3 percent, to $6.89 billion, or $1.05 a share, from $6.68 billion, or 99 cents a share, in the period a year earlier.

Earnings at Total, excluding changes in the value of a stake in the drug maker Sanofi-Aventis, gained 16 percent, to 3.38 billion euros ($4.27 billion), from 2.92 billion euros.

Profits for oil companies have been helped by rising energy prices, which gained this year on concern that exports from Iran, the world's fourth-biggest producer, may be cut. Violence in Nigeria, Africa's biggest oil supplier, which has shut about a fifth of the country's production, including some Shell-operated fields, also pushed prices higher.

Shell's profit excluding changes in inventory values rose 12 percent, to $6.09 billion. Analysts had forecast profit of $5.67 billion.

Shell's profit gain was a “positive surprise,” driven partly by higher-than-expected profits from the gas and power division, including record sales of liquefied natural gas, said Citigroup analysts, including Jonathan Wright, in a note to investors.

Shell's oil and gas production fell 3 percent from the earlier quarter, to 3.75 million barrels a day of oil equivalent. Excluding hurricane and pricing effects, output would have been up 1 percent on the year, Shell said.

Total's quarterly production dropped 5 percent, to 2.44 million barrels a day. Total, based in Paris, reaffirmed its goal to increase production by about 4 percent a year through 2010, Robert Castaigne, the chief financial officer, said in a conference call with reporters.

Shell made no change to its production estimates for this year. It expects to pump 3.8 million to 4 million barrels a day in 2009.

The company, which has headquarters in the Netherlands and in Britain, said it was less likely to reach a target of replacing 100 percent of the oil and gas it pumps from 2004 through 2008, because rising costs are delaying some projects.

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