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Last Updated: Thursday, 28 July 2005, 13:33 GMT 14:33 UK
Pricey oil buoys Shell and Exxon
Shell logo outside petrol station
The Anglo-Dutch group was unified last week
Rocketing oil prices have sent profits soaring at oil firms Royal Dutch Shell and Exxon.

Shell said profits for the three months to June rose 22% from the previous year, while US rival Exxon notched up a 32% gain over the same period.

Oil prices are up more than 50% from the start of 2005.

For Shell, the result was net earnings of $4.62bn (2.65bn), even after gains from the rising value of fuel stocks were excluded.

The oil giant said its oil and gas production averaged 3.526 million barrels a day.

Reserve issues

Shell has faced criticism in the past few years after it had to admit that it had overstated its reserves.

It is now increasing the the amount it spends in exploration - the discovery of new oil and gas - in 2005 and 2006 to $1.8bn a year from $1.5bn.

Overall it is keeping capital expenditure at $15bn for 2005 - despite a setback earlier in July when it was revealed that its flagship Sakhalin II gas project was likely to go over budget by more than 50% to about $20bn.

Exxon has its own concerns about replenishing its stocks.

The firm, the largest publicly-traded oil company in the world, said oil and gas production dropped 4% as rising output of African oil and Qatari gas failed to offset maturing fields elsewhere.

Still, Exxon made a net profit of $7.64bn, on reenues of almost $89bn, up 25% from a year earlier.

New discoveries

The Anglo-Dutch group was finally unified last week in a bid to rebuild investor confidence after last year's oil reserves debacle.

Our good earnings and cash generation can be used for dividends, investments and share buybacks
Jeroen van der Veer, chief executive

Previously the company had been co-owned by British and Dutch holding firms.

In its downstream business, Shell accumulated $3.9bn from oil products over the past six months - up 43% on the same time last year.

Higher margins at its refineries in the US, Europe and Asia Pacific helped offset lower profits from its retail operations, including petrol stations.

"Our good earnings and cash generation can be used for dividends, investments and share buybacks," chief executive Jeroen van der Veer said.

Shell also announced it had made two oil discoveries offshore Nigeria as part of its "Big Cat" project in the region.

"Further appraisal is required to determine the discoveries' resource potential", it said.

Shell's shares closed down 1.7% at 1759 pence on concerns about heavy levels of investment.




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