Shell Posts Surprise Earnings Beat on Chemicals, Stock Market Gains

Royal Dutch Shell plc, #1 European oil refiner, reported a surprise increase in Q1 income on strong refining revenue, chemical production, and equity portfolio gains. Net profit was up 5.4% to $7.28 billion ($1.15/share). Excluding one-time items, profit was $6.6 billion, way ahead of the $5.61 billion median analyst estimate. ING analyst Jason Kenney: "These numbers are quite phenomenal," adding the real surprise was in its strong chemical revenues; profit at the unit more than tripled to $480 million. Bloomberg reports Shell is the fourth oil major to report higher profits from refining as U.S. consumers pay close to $3/gallon for gasoline. Last week BP reported a 17% drop in profits while ExxonMobil saw a 10% jump. The company said it will resume oil production in Nigeria, where supplies have been inhibited because of militant attacks; it is the country's biggest foreign oil producer. Shell's corporate financing arm reported profits of $801 million (up from $227 million last year) due to the "realization of gains on the sale of the equity portfolio held by the group insurance companies." Oil production was down 6.4% to 3.5 million barrels/day due to lower natural gas production and the Nigerian shutdown. Average selling price was $54.45/barrel vs. $57.39 last year. Shares are up 2% to $72.08 in pre-market trading.

Sources: Press release, Bloomberg, AP
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Stocks/ETFs to watch: Royal Dutch Shell (RDS.A). Competitors: ExxonMobil Corp. (XOM), BP plc (BP), ConocoPhillips (COP), Chevron Corp. (CVX), Total S.A. (TOT). ETFs: SPDR Oil & Gas Exploration & Production ETF (XOP), iShares Dow Jones U.S. Oil & Gas Exploration/Production (IEO)

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