Record Profit for Shell but Fourth Quarter Disappoints
Oil giant Royal Dutch Shell posted record European company earnings of $27.6 billion in 2007, but fourth-quarter profit missed forecasts as a fall in production dampened the benefit of high oil prices.
The world's second-biggest non-government controlled oil company by market value said on Thursday its current cost of supply (CCS) net income, which strips out changes in the value of fuel inventories, rose 11 percent to $6.7 billion in the final quarter of 2007.
Excluding a net gain to non-operating items of $963 million, fourth-quarter CCS net income was $5.74 billion, compared with an average forecast of $6.1 billion in a Reuters poll of nine analysts.
A spokesman said its refining division had performed worse than analysts had expected.
Shell also reported higher-than-expected capital spending for 2007 and upped its budget for future years significantly, reflecting the increasing cost of getting oil and gas out of the ground.
Shell said 2007 capital expenditure was $26.6 billion, and $23.8 billion net of disposals. The Anglo-Dutch firm said in October that gross capital expenditure would be $24-25 billion, or $22-23 billion net of disposals.
Shell said in slides published on its Web site that capital expenditure for 2008 would rise to $28-29 billion, excluding acquisitions and that after disposals the figure would be $24-25 billion. In October it predicted medium term capex of around $22-23 billion, net of disposals.
Analysts had expected an increase in Shell's capex.