Surging crude boosts profits for BP, Shell

In Cambridge yesterday, gas prices at a Shell station were over $3.50 a gallon. Royal Dutch Shell's profit jumped 25 percent in the first-quarter, and rival BP's net income jumped 63 percent. (BRIAN SNYDER/REUTERS)

AMSTERDAM - BP PLC rose the most in eight years and Royal Dutch Shell PLC had its biggest gain since January after the oil companies reported $100 crude prices led to better profits than analysts estimated.

BP, Europe's second-biggest oil company, surged 6 percent in London trading after posting a 63 percent jump in first-quarter net income to $7.62 billion. The A shares of Shell, number one in Europe, climbed 5.3 percent in London after profit climbed 25 percent to $9.08 billion. Their combined earnings were higher than Iceland's annual gross domestic product.

"We have a very good set of numbers thanks to higher oil prices," said Colin Morton, who manages about $3.2 billion at Rensburg Fund Management in Leeds, England. Both sets of results "beat expectations across the board," he said.

Output rose at Shell and BP in the first three months of the year, helping to counter falling margins from refining as processed fuels such as gasoline and diesel failed to keep pace with crude gains.

Oil reached $111.80 a barrel in March while natural gas increased by an average 22 percent. Crude touched a record $119.93 in New York on Monday.

Excluding changes from holding inventories and one-time items, Shell's profit was $7.85 billion, beating the $6.88 billion median estimate of eight analysts surveyed by Bloomberg. BP's profit on the same basis advanced to $6.49 billion, above the eight-analyst median estimate of $5.26 billion.

First-quarter profit at ConocoPhillips, the third-largest US oil company, rose 17 percent to $4.14 billion as crude and gas prices gained, the company said April 24. Exxon Mobil Corp., the world's biggest oil company, is scheduled to report earnings tomorrow, and Chevron Corp., the number two in the United States, releases a day later.

Shell relied on increasing natural gas production to make up for slumping crude output. The Hague-based company said militant attacks in Nigeria forced it to shut in 164,000 barrels a day of production.

"We are seeing an uptick in attacks," chief financial officer Peter Voser said. The Movement for the Emancipation of the Niger Delta, or MEND, has stepped up attacks on pipelines in Nigeria's oil-rich Niger Delta in recent weeks in an attempt to cripple the nation's crude exports.

Overall output increased to more than 3.52 million barrels of oil equivalent a day, above the 3.37 million estimated by analysts. Gas output gained 9 percent in the period, with oil production down 6 percent.