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Financial Times: BP set to outshine Shell again


By Joanna Chung in London

Published: April 25 2004 20:21 | Last Updated: April 25 2004 20:21  


When BP reports what are expected to be solid first quarter results on Tuesday, it will be given another opportunity to shine brighter than its rival Royal/Dutch Shell, still wrestling with its crisis over reserves reporting.


Shell, which reports results on Thursday, was dealt its latest blow last week when it admitted that its top executives were aware of the overstatement of its oil and gas reserves for nearly two years before making the information public.


Meanwhile, Lord Browne, BP chief executive, and his team have won praise from shareholders in recent years. BP has also benefited from the flow of bad news hounding Shell, analysts say, and there are unlikely to be any surprises tomorrow.


BP has retained investors' faith by repeatedly reassuring them on its own reserves policy. Last month, Europe's largest energy group pledged a cash windfall to shareholders of up to $6bn a year if oil prices remained high, as it mapped out its future strategy.


For BP, analysts' consensus forecast for underlying pro-forma profit is $3.28bn, higher than last quarter's $2.67bn, but down from $3.73bn a year ago.


Tomorrow's headline earnings number will also include a $1.3bn gain from the sale of BP's minority stakes in two Chinese oil companies. The figure, which includes gains and losses from exceptional items, was introduced to conform to accounting standards relating to pensions and stock option plans.


High oil and gas prices, which will lift reported profits at BP, will also give Shell some respite in what has otherwise been a dismal four months. The consensus forecast for Shell is $3.6bn for the first quarter, up from $1.86bn last quarter but down from $3.91bn a year ago.


Some analysts say it is possible for Shell to turn in better results than BP. "Shell is a smaller company by market capitalisation and there is a big question around management, but the Q1 numbers might demonstrate that Shell is still standing numerically," one said.


Neither company is likely to claim record profits because of rising exploration and development costs among other factors.

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