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Thursday, 3 May, 2001, 10:46 GMT 11:46 UK
Shell posts record profits

The oil giant Royal Dutch/Shell has reported a 23% rise in net profit to $3.86bn (2.69bn) for the first three months of 2001.

The company said the figure was a fifth successive quarterly record and reflected higher natural gas prices, bigger profits from oil refining and increased liquefied natural gas (LNG) sales.

Like all major oil companies, Shell has also benefited from strong crude oil prices in the past year.

The string of record profits from oil companies in recent months has led some consumer groups to accuse them of profiteering.

In the UK, the anger of most groups has been directed mainly at government for the relatively high level of tax imposed on retail petrol prices.

But Shell recently provoked consumers' anger by increasing forecourt prices only weeks after the government had announced a temporary cut in duty on unleaded fuel.

Expansion setbacks

Besides higher oil and gas prices, Shell's latest results also continued to reflect deep cost-cutting measures implemented in the wake of very low oil prices in 1998.

Analysts said the company was now in a position similar to that of UK rival BP two-three years ago and was well positioned to make significant acquisitions.

Incoming chairman Phil Watts - who has been Shell's head of exploration and production - is viewed as favouring an aggressive growth strategy.

Recent expansion moves have included the acquisition of New Zealand's Fletcher Challenge Energy.

However, Shell has also experienced several setbacks, such as the blocking by the Australian government of its move to take control of Woodside Petroleum and the failure of US firm Barrett Resources to succumb to Shell's advances.

Outgoing chairman Mark Moody-Stuart hinted the company would not increase its already-improved $60 a share bid for Barrett.

"What we will not do is pursue targets purely in the interests of making a deal," he said in a statement.

As good as it gets?

Shell shares moved lower in morning trading in London, standing at 566.5 pence at 1040 GMT, down 16.5p.

This was modestly down on the 2001 high of 601p and compared with last year's trading range of 411.75-627p.

Analysts said investors were calculating that the period of very high oil prices was now at an end while cost savings had already been factored in.

"It's perverse, but it's a case of this just must be as good as it gets," said Teather & Greenwood analyst Mark Redway.

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