BLOOMBERG: Shell Canada's Profit Rises 1.3% on Higher Oil Prices (Update1): Posted 26 October 2005

Oct. 25 (Bloomberg) --Shell Canada Ltd., the country's fourth-largest oil company, said third-quarter profit rose 1.3 percent as higher employee stock compensation costs and narrower refining margins limited benefits from soaring energy prices.

Net income rose to C$457 million ($338.4 million), or 55 cents a share, from C$451 million, or 54 cents, a year earlier, the Calgary-based company said in a statement today. Sales rose 29 percent to C$3.96 billion from C$3.06 billion.

Chief Executive Clive Mather, 58, is planning to boost the company's oil production from tar-like sands in northern Alberta to capitalize on growing demand that sent New York crude-oil futures to a record in late August. A surge in the company's shares increased the value of stock-options awards to employees, reducing third-quarter profit by C$83 million.

Shell Canada's share of bitumen, an extra-heavy oil, from the Athabasca Oil Sands Project rose 7.1 percent to an average of 99,100 barrels a day. The synthetic oil produced from the bitumen at Shell Canada's Edmonton, Alberta, refinery, sold for an average of C$66.37 a barrel, up from C$48.95 in a year earlier.

Shell Canada controls 60 percent of the joint venture. San Ramon, California-based Chevron Corp. and Western Oil Sands Inc., a Calgary-based oil company, each own 20 percent.

The company's refining unit earned C$81 million, down from C$114 million a year earlier mainly because of increased maintenance costs at two refineries.

Gas Sales, Prices

Daily gas sales in the quarter fell 2.4 percent to 523 million cubic feet a day as prices for the fuel rose 28 percent to C$7.98 per thousand cubic feet.

Shell Canada also owns gas fields off the coast of eastern Canada and in western Canada and a national chain of filling stations. The company is 78 percent owned by Royal Dutch Shell Plc, Europe's second-largest oil company behind BP Plc.

Shares of Shell Canada rose 27 cents to C$34.90 at 3:44 p.m. on the Toronto Stock Exchange. The stock, which has six buy ratings from analysts and nine holds, has gained 31 percent this year.

Imperial Oil Ltd., EnCana Corp. and Petro-Canada are Canada's largest oil companies, ranking ahead of Shell Canada.

To contact the reporter on this story:

Ian McKinnon in Calgary at imckinnon1@bloomberg.net. 

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