Shell, Statoil profits soar on higher oil

By Tom Bergin

Shell, Europe's largest oil company by market capitalization, said its underlying current cost of supply (CCS) net income in the third quarter, excluding one-offs, soared 42 percent to $7.0 billion.

Statoil said its adjusted net income, which is calculated on the same basis, rose 50 percent in dollar terms to $2.07 billion in the third quarter.

Both companies' earnings were broadly in line with analysts' forecasts.

Shell's London-listed "A" shares traded up 1.7 percent at 2,292 pence at 0809 GMT, compared with a 1.4 percent rise in the STOXX Europe 600 Oil and Gas index <.SXEP>. Statoil shares rose 2.2 percent to 144.8 NOK.

Later on Thursday, Exxon Mobil, the world's largest publicly-traded oil company, is expected to report a 40 percent jump in third-quarter net income to $10.26 billion, according to I/B/E/S estimates.

Analysts agreed that Shell was entering a "sweet spot" of strong cash flow thanks to its Athabasca oil sands project in Canada, and its Pearl gas-to-liquids and Qatargas liquefied natural gas plants in Qatar.

"The 'big 3' projects are delivering less than 50 percent plateau production and Qatar less than 50 percent of plateau cashflows, hence significant momentum remains," Jon Rigby, oil analyst at UBS, said.

Statoil said its output - buoyed by a revitalization of exploration and production in the Norwegian North Sea - rose 14 percent in the quarter compared with the same period last year, to 1.57 million boepd.

However, Statoil still expects its output to be down slightly this year, before rising next year.

"Statoil has just released a mixed set of 3Q11 financial figures," Teodor Sveen Nilsen, analyst at First Securities in Oslo, said.

The Japan earthquake earlier this year and subsequent shut down of nuclear plants has boosted demand for natural gas, especially liquefied natural gas, in which Shell is a market leader.

The Hague-based company said LNG sales rose 12 percent, echoing buoyant LNG results reported by smaller rival BG Group on Tuesday.

Shell said its CCS net earnings were $7.2 billion, a 100 percent rise on the same period last year when non-cash accounting charges weighed on the result.

CCS earnings strip out unrealized gains or losses related to changes in the value of inventories, and as such are comparable with net income under U.S. accounting rules.

(Additional reporting by Gwladys Fouche in Oslo and Sarah Young in London)