By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- Oil giant Royal Dutch Shell announced a 15% rise in second-quarter net profit Thursday, as higher production and lower costs were partly offset by a bigger tax bill.
The company said quarterly profit rose to $4.39 billion from $3.82 billion in the year-earlier period, as revenue grew 42% to $90.57 billion.
Excluding one-off items and the impact of changing energy prices on its unsold inventory, Shell /quotes/comstock/23s!e:rdsa (UK:RDSA 1,827, +13.50, +0.74%) /quotes/comstock/13*!rds.a (RDS.A 56.28, 0.00, 0.00%) said profit rose 34% to $4.21 billion.
/quotes/comstock/23s!a:bp. BP. 406.50, +4.80, +1.19%
Analysts polled by Dow Jones Newswires had, on average, forecast an adjusted figure of $4.02 billion.
Chief Executive Peter Voser said the company has achieved $3.5 billion of annual cost savings from the restructuring program it announced last year -- 15% more than the initial target and around six months ahead of schedule.
As part of its restructuring, Shell is exiting noncore positions in both its upstream and downstream operations and focusing on opportunities with the strongest growth potential.
Voser said the firm expects to sell $7 billion to $8 billion of assets through 2011 as it accelerates those disposal plans.
He said on a conference call that it normally targets asset sales of around $2 billion a year, so the new plan should effectively double that rate for the next two years.
"We continue to see mixed signals in the global economy," Voser said.
"Oil prices have remained firm so far this year, but refining margins, oil-products demand and natural-gas spot prices all remain under pressure. Our earnings and cash flow have rallied from 2009's lows, but the outlook remains uncertain," he added.
Shares of the oil giant ended down 0.2% on the London Stock Exchange, giving up earlier gains. They have fallen 12% over the past three months.
Total oil and gas production in the quarter rose 5% to 3.11 million barrels a day, and liquefied-natural-gas sales volumes were 34% higher than the year-ago period.
Societe Generale analyst Evgeny Solovyov said the second quarter is usually a seasonally weak one for exploration and production, but that a strong performance in natural gas and LNG sales helped Shell buck that trend in the latest quarter.
The key questions that remain for the firm are how the Gulf of Mexico disruptions affect its output and how soon U.S. authorities will let it resume exploration in Alaska, Solovyov said.
Hayward headed to Siberia
Highly criticized BP Chief Executive Tony Hayward, whose gaffe-prone comments sullied the company's image in the wake of the worst oil spill in U.S. history, will step down and take over BP's joint venture in Russia. Video courtesy of Fox News.
The company has several drilling rigs sitting idle in the Gulf of Mexico, following the moratorium on drilling.
Chief Financial Officer Simon Henry said it would be uneconomical to move them if the drilling ban remains for just six months and that the company has, in some cases, negotiated reductions of up to 70% in the cost of leasing the rigs while they are idle.
A $56 million charge was taken for the impact of the moratorium in the second quarter, and further charges are likely in the third quarter, the group said. Output for 2010 will likely be around 8,000 barrels a day lower due to the drilling ban.
Rival BP reported a $17.2 billion quarterly loss earlier in the week after taking $32.2 billion in charges linked to the oil spill in the Gulf of Mexico. See full story on BP's loss.
Shell said Thursday that it has kept its second-quarter dividend unchanged at 42 cents a share.
Simon Kennedy is the City correspondent for MarketWatch in London.
