The Observer: Profits bonanza for BP and Shell: “Shell is also challenged as it failed to invest adequately in exploration and development in the Nineties. Earlier this year the company was rocked by revelations that it had improperly booked up to 20 per cent of its reserves. The disclosures led to the departure of chief executive Phil Watts and other managers.” (ShellNews.net)
Richard Wachman and Oliver Morgan
Sunday October 24, 2004
The oil giants BP and Shell are expected to report record third-quarter profits this week, thanks to a soaring oil price that is expected to remain close to $50 a barrel until the spring.
But the price could go higher if there are more disruptions to supply in places such as Iraq and Nigeria; some analysts believe it could hit $60 if there is a cold snap this winter.
Shell and BP both expect to unveil profits of more than $4 billion for the three months to the end of September, putting them on course to make UK corporate history when they report record annual figures of between $16bn and $17bn for 2004.
Crude prices are being bolstered by surging demand from places such as China. Despite high profits, which could spark anger from consumer groups worried about the cost of petrol, both Shell and BP are facing a difficult period if they are to hit their production targets.
BP production is expected to be around 2 per cent lower than in the second quarter, but 11 per cent up on the same period last year. Analysts said crude prices averaged $41 for the quarter, about $12 above the comparable 2003 figure.
Shell is also challenged as it failed to invest adequately in exploration and development in the Nineties. Earlier this year the company was rocked by revelations that it had improperly booked up to 20 per cent of its reserves. The disclosures led to the departure of chief executive Phil Watts and other managers.
Lord Browne, the chief executive of BP, is likely to give a bullish outlook for prices, while indicating that the company's share buy-back plan will continue. Andrew Archer, of Commerzbank, said: 'These are record figures driven by the upstream business. The outlook is strong, as prices remain high and downstream marketing and refining margins grow.'
http://observer.guardian.co.uk/business/story/0,,1334454,00.html