Royal Dutch Shell reported a 5 per cent rise in second-quarter current cost of supply (CCS) net income to $7.9 billion, and said it beat analysts' forecasts, on the back of high oil prices.
The world's second-largest non-government controlled oil company by market value added today it was raising its investment budget for 2008 to over $40 billion to cover rising costs and the weak dollar, and to make acquisitions.
Shell's "A" shares traded up 1.25 per cent at pence at 8.46am, underperforming a 1.89 per cent rise in the DJ Stoxx European oil and gas sector index.
A spokesman said Shell's underlying results had increased 24 per cent to $8.6 billion, after excluding $750 million in non-cash charges, beating an average forecast of $8.3 billion from a Reuters poll of nine analysts.
Rival BP reported a 61 per cent rise in underlying second-quarter profits on Tuesday.
Not all analysts agreed with Shell's exclusion of the charges from the underlying result, as they sat outside the normal description of non-operating items, while those who accepted the numbers criticised the way they were presented.
"It's a bit confusing," one analyst said. "I'm not sure why they've done it like this."
Shell said oil and gas production fell slightly to 3.126 million barrels of oil equivalent per day (boepd) in the second quarter 2008, from 3.178 million boepd in the same quarter last year.
A dearth of big new start-ups has failed to match field decline but the drop in output was not as severe as in some recent quarters.
Shell said it planned to boost organic capital investment to $30-31 billion in 2008, from a planned $28-29 billion, due to rising costs and the weak dollar. The company also expects to spend $10 billion on acquisitions.
The Anglo-Dutch oil major also claimed exploration success.
"During the first half of 2008, Shell had four notable exploration discoveries in offshore Nigeria, Australia and Brunei and onshore USA," the company said.
Shell's upstream oil and gas division was the main profit driver, despite lower production, because oil prices almost doubled to over $120 in the quarter, before pressing ahead to a record high above $147 on July 11th.