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Last Updated: Thursday, 28 April, 2005, 13:57 GMT 14:57 UK
Oil surge boosts Shell's earnings
Chief executive Jeroen van der Veer
Jeroen van der Veer has sought to rebuild investor confidence
Shell has reported a 28% increase in first-quarter profit thanks to surging oil prices.

The Anglo-Dutch energy giant reported current cost of supply (CCS) earnings of $5.54bn (2.91bn), beating the forecasts of analysts.

The merger of the firm's twin boards - a move to rebuild investor trust - is on track, said chief executive Jeroen van der Veer.

Meanwhile, oil firm Exxon Mobil posted first quarter net profits of $7.86bn.

Exxon Mobil said strong oil prices helped pump profits up 44%, against the same period last year. Sales revenues rose 21% to $82.05bn.

Reserves fallout

Shell's earnings may bring some relief to its embattled board. Investors have pressed for reforms to bring greater transparency since Shell shocked them with cuts to its proven reserves last year.

Shell's former chief executive was one of the top directors forced out after the oil firm had to lower its estimate of its proven reserves.

In a bid to rebuild investor trust, Shell announced plans in October to merge its Dutch and UK holding companies and scrap its 100-year-old twin board structure, which investors blamed for a lack of transparency during the reserves crisis.

The results are much better than expected
Margarita Shevtsova, analyst

Currently, Royal Dutch Petroleum holds 60% of the group, while Shell Transport and Trading owns 40%.

Shell said a number of US lawsuits were still pending in relation to the reserves debacle.

Buoyant oil sector

Analysts welcomed Shell's results.

"The results are much better than expected, and we consider them as positive," said Margarita Shevtsova, analyst at Bank Oyens & van Eeghen.

"It is possible for them to increase their share buy-back programme because they have a strong cash position."

Shell's profits jump comes two days after rival BP announced a 29% increase in first-quarter profits, results which were also buoyed by the strength of oil prices.

Exxon Mobil's financial results continue the trend, though the US oil giant's earnings per share fell a couple of cents short of analysts' expectations. It has pledged to step up its share buy-back programme.

Forecourt loss

However, Shell made a loss on petrol sales in the UK during the period as the cost of buying crude oil on the open market surged.

This came as little comfort to campaigners for lower petrol prices.

"These Shell figures will add to the pain of motorists who are already suffering from high petrol pump prices," said Paul Watters, head of roads and transport policy at the AA Motoring Trust.

Shell has a presence in 146 countries and employs about 110,000 people worldwide. It accounts for about 3% of the world's crude oil production.

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