Show me the money

27 October 2005

The oil giant has recovered its poise after the Watts affair. But investors worry it may address its reserves problem by doing a huge deal. The company is stoking these worries by building a huge warchest. If it wants to win trust, it should hand back more cash to investors.

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Royal Dutch Shell, Europe's secondlargest oil company, said third quarter profits rose by 69 percent due to the sale of a Dutch pipeline network and higher energy prices.

Earnings rose to $7.4bn from $4.4bn. Before extraordinary gains from the $1.8bn pipeline sale and other extraordinary items, profits were $5.8bn, a rise of almost a third. At rival BP, third quarter profits rose by 16% to $4.41bn.

Shell was the hardesthit oil company in the US hurricane season after Katrina wrecked its Mars rig, which pumped about 5% of Shell's oil. Its daily output was worth some $8m a day. Shell said the Mars field should stay shut until the second half of next year.

Shell's total hurricane costs after tax will amount to about $350m million, although a significant portion may be recovered from insurers, it said.

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