AMSTERDAM ? Royal Dutch Shell PLC, Europe's largest oil company, reported Thursday a near doubling in second quarter profits as higher oil prices and one-time gains offset a drop in production.
Net profit of $8.66 billion was up from $4.39 billion a year earlier. Though overall output slipped because of asset sales, the company saw new, more lucrative oil projects come on line.
Earnings were also helped by a $1.44 billion gain booked on a mix of tax credits, trading activities, and asset sales.
The company's CCS profit, or profit at its current cost of supplies, was $6.55 billion excluding one-time gains, up from $4.21 billion a year earlier. The nonstandard measure, which seeks to strip out the impact of volatile oil prices on the company's earnings, is closely watched by analysts and came in slightly lower than they had forecast.
"Without the distractions which have plagued arch rival BP, Shell has been able to capitalize on higher energy prices and the bottom line performance is stark confirmation of the gap between the two," said Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, in a note on the earnings.
Shares fell 0.9 percent to euro25.565 in a broadly lower market in early Amsterdam trading.
Though Shell has been investing heavily in new projects, production fell 2 percent to 3.05 million barrels per day.
Excluding asset sales, production would have risen 2 percent, Shell said, with 285 thousand barrels of oil per day added from new fields in Qatar, Nigeria and Canada more than offsetting the impact of field declines.
Hunter, the analyst, said these new investments would help the longer term performance, whereas potential headwinds, such as tax increases or regulation resulting from the Gulf of Mexico spill, were likely to strike the industry as a whole.
Profits at upstream operations were up 85 percent to $6.06 billion, including $641 million in one-off gains from tax credits, trading gains, and sales of operations, Shell said.
"We have made important progress with new production in 2011, and the ramp-up of our new projects should drive our financial performance in the coming quarters," said Chief Executive Peter Voser in a statement.
The downstream operations, which include the refining arm, saw profits drop 7 percent on a CCS basis to $1.08 billion, reflecting lower refinery intakes and worse margins. The non-CCS results included gains of $802 million, mostly from the sale of operations in Chile and the Dominican Republic.
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