Shell profits soar after cost cutting, production growth (Roundup)

Feb 3, 2011, 14:17 GMT

London - Annual profits of oil giant Royal Dutch Shell nearly doubled to 18.6 billion dollars in 2010 after substantial production growth and a rigorous cost-cutting programme, according to results published Thursday.

The increase in earnings over 2009, when Shell made a profit of 9.8 billion dollars, was due to the 'good progress' Shell hade made in implementing strategy and improving 'industry fundamentals,' said chief executive Peter Voser.

Growth was particularly strong in the last quarter of 2010, when Shell made profits of 5.7 billion dollars, a trend fuelled largely by the recent steep increase in the price of crude oil.

The total 2010 oil and gas production increased by 5 per cent, with the share of gas production almost equalling that of oil output, figures showed. Analysts said Shell was expecting gas output to outstrip oil by 2012.

In 2010, Shell sold off non-core assets of 7 billion dollars, taking the total of asset sales in the last five years to 30 billion dollars, the figures showed. Proceeds for 2011 were estimated to reach 5 billion dollars.

At the same time, Shell made acquisitions worth 7 billion dollars in 2010 and invested a further three billion dollars in exploration activities.

During 2009 and 2010, underlying costs had been cut by 4 billion dollars, or 10 per cent, said Shell. Some 7,000 jobs were shed over the period.

Earlier this week, Shell's main rival, BP, reported an annual loss of 4.9 billion dollars due to the costs of clearing up the Gulf of Mexico oil spill.

Experts said that while currently high oil prices provided a tailwind for companies, the results for Shell showed that its prospects were 'beginning to look brighter as the benefits of a large investment programme begin to filter through.'

Read more about Great Britain Business

Read more about Energy