Royal Dutch Shell today announced a 49% surge in first quarter profits as the energy giant joined rival BP in benefiting from higher oil prices.
The Anglo-Dutch group reported earnings of 4.9 billion US dollars (£3.2 billion) for the first three months of the year - a day after BP posted a figure of 5.6 billion US dollars (£3.6 billion).
Chief executive Peter Voser said rising energy prices and an improved operational performance meant Shell's profits were sharply higher than the 1.18 billion US dollars in the final quarter of 2009.
Shell's performance has lagged behind BP as it has been forced to ramp up spending to secure new sources of oil and gas at a time when refining margins are under pressure due to global overcapacity and economic weakness.
The company cut 5,000 jobs last year and will remove another 1,000 in 2010 - mainly in downstream and corporate functions - to make it more competitive against its rivals.
Analysts believe the firm has suffered for "taking its foot off the pedal" in exploration in the late 1990s.
Mr Voser, who said the company's results had "improved considerably", claimed the recent turnaround was largely driven by Shell's own actions.
He added: "The priorities are for a more competitive performance, for growth, and for sharper delivery of strategy. There is more to come from Shell."
Today's results compare with the nadir of the recession in the first quarter of 2009, when crude prices averaged just over 41 dollars a barrel, although a year later this figure stands at an average 76 dollars.
Mr Voser said there were mixed signals for the near-term outlook.
"So far in 2010, oil prices have remained firm, and demand for petrochemicals has increased, but refining margins, oil products demand and spot gas prices all remain under pressure.
"Although there are signs of an improving economic outlook, we are not relying on it. We are continuing with our focus on cash flow growth, underpinned by new project start-ups and lower costs," he said.
Shell's operational improvement included a 6% rise in production volumes as it benefited from new upstream projects in Russia and Brazil. Earnings from upstream operations more than doubled to 4.41 billion US dollars (£2.9 billion).
Shell restored profitability in its downstream business after losses of 952 million US dollars in the final quarter of last year. Earnings of 1.33 billion dollars (£866.8 million) were 11% higher than a year earlier as Shell set about implementing its cost-cutting plans.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said today's results were comfortably ahead of forecasts.
He added: "A rising oil price aside, evidence of group self-help is clearly identifiable, a fact which appears to be moving market consensus opinion from a strong hold to an outright buy."Reuse content