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BLOOMBERG: Shell First-Quarter Profit Rises 28% on Higher Oil, Gas Prices: “Shell paid $151.5 million in U.S. and U.K. fines, dismissed three executives and lost its top-tier credit rating. The U.S. Justice Department is conducting a criminal probe.” ( 28 April 05


April 28 (Bloomberg) -- Royal Dutch/Shell Group, Europe's second-largest oil company, said first-quarter profit rose 28 percent because of higher oil and gas prices and rising fuel demand.


Net income increased to $5.55 billion from $4.33 billion a year earlier, excluding gains from holding oil inventories, Shell said today in a statement on PR Newswire. That compares with analysts' estimates of $4.67 billion, the median of seven surveyed by Bloomberg. The results are the first for Shell under the International Financial Reporting Standards for accounting.


Royal Dutch/Shell Group, based in London and The Hague, is benefiting from rising energy prices as its reserves and production decline, the result of maturing fields in Europe and the U.S. Shell also faces a criminal probe in the U.S. after overstating oil and gas reserves by 41 percent in 2002.


BP Plc, Europe's largest oil company, two days ago reported a 29 percent rise in net income and said oil demand remains ``strong.'' The world's biggest publicly traded oil company, Exxon Mobil Corp., is expected to also report rising profits later today. Exxon, BP and Shell together earned $16.5 billion in the fourth quarter.


Two-thirds of Shell's most prospective wells in 2004 were dry holes, and oil output won't rise until 2007, Chief Executive Officer Jeroen van der Veer said in February.


Because of the reserve writeoffs, first disclosed in January 2004, Shell paid $151.5 million in U.S. and U.K. fines, dismissed three executives and lost its top-tier credit rating. The U.S. Justice Department is conducting a criminal probe.




Shell earlier this year boosted its potential sale of businesses in the two years through 2006 to $15 billion from $12 billion. The company also resumed its share buyback for 2005, planning to spend as much as $5 billion to return surplus cash to shareholders. Most of the buyback will take place in the second half of the year, the company said.


Shell sold $564 million of gas and power assets in 2004. In January, it agreed to sell its Bakersfield, California, oil refinery to closely held Flying J Inc., the largest U.S. diesel retailer. Terms weren't disclosed. In February, it sold its share of the Skinfaks deposit in the North Sea to Statoil ASA, Norway's biggest oil company.


Earlier this month, Shell and Bechtel Group Inc. agreed to sell parts of their InterGen power venture to a partnership of AIG Highstar Capital II LP and the Ontario Teachers' Pension Plan for $1.75 billion.


Accounting Standards


Output of oil and gas output fell to 3.85 million barrels a day, from 4.06 million a day a year earlier.


On April 21, Shell restated its first-quarter 2004 net income to $4.7 billion from $4.61 billion because of new International Financial Reporting Standards. Both those figures include a $370 million profit from holding oil inventories.


The standards are designed to help align U.S. and European rules.


Irving, Texas-based Exxon Mobil later today may report earnings of $7.66 billion, the average of 18 analysts surveyed by Thomson Financial and based on 6.39 billion shares outstanding at the end of last year. That's more than the year-earlier period's $5.44 billion and less than the $8.42 billion in the fourth quarter.


To contact the reporter on this story:

Stephen Voss in London


Mathew Carr in London at 


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