Exxon, Shell profits surge on higher oil prices

By Tom Bergin

LONDON (Reuters) - Exxon Mobil and Royal Dutch Shell Plc reported big jumps in first quarter earnings and beat forecasts, thanks to high oil prices and healthy refining margins.

Shell said current cost of supply (CCS) net income rose 22 percent to $6.9 billion in the first three months.

Brent crude was 38 percent higher in the first quarter compared with the 2010 period, while global refining benchmarks tripled.

ConocoPhillips on Wednesday reported a 43 percent rise in net income, while BP posted a 2 percent drop in replacement cost earnings due to lingering effects of the oil spill. Both companies lagged forecasts.

Replacement cost and CCS net income strips out unrealized gains related to changes in the value of oil inventories and so is comparable to net income under U.S. GAAP.

U.S. natural gas prices dropped while European prices and the price of liquefied natural gas jumped, following the Japanese earthquake, which was expected to lead to higher gas demand in that country as nuclear power is scaled back.

Exxon said oil and gas production rose 10 percent compared with the 2010 period, to 4.82 million barrels of oil equivalent per day (boepd), thanks to the XTO takeover, while Shell said output fell 3 percent to 3.50 million boepd, due to divestments.

Analysts said the ramp-up of new projects in the second half of the year and strong oil prices could allow Shell to boost its dividend as some rivals struggle to keep theirs constant.

"Gearing remains low and, with the expected growth in cash generation from H2 2011, supports dividend growth from Q1 2012, in our view," Citigroup analyst Alastair Syme said in a research note.

High oil prices are also boosting the companies which provide equipment and personnel to help big oil projects on stream. On Thursday, French oil services group Technip posted a rise in first-quarter profit and margins as higher oil prices led producers to ramp up spending on new fields.

(Editing by David Cowell)