“The overall impression given by the internal Garda investigative process was that complaints or matters of concern were put through a process of filtration or distillation so that, by the end of the process, any matter of concern had been removed as a form of impurity, and only what was good was found to remain.”
JOHN BOWKER DEPUTY CITY EDITOR
ROYAL Dutch Shell, the world's third biggest oil company, impressed investors yesterday with a forecast-busting 36 per cent rise in second-quarter profits, sending its shares up more than 2 per cent.
The energy giant said its exploration strategy, as well as record oil prices, had helped deliver a robust quarterly profit of $6.3 billion (£3.4bn), despite production falls accelerated by violence in Nigeria.
Over the entire first half, profits were up 23 per cent at $12.4bn, while revenues were up 19 per cent. The shares closed up 2 per cent, or 38p, at 1,910p. ''It is a very good performance for Shell,'' said Jaap Barendregt at FBS Bankiers. Jason Kenney at ING added: ''The performance compares well to arch rival BP, where clean profits increased only 22.8 per cent year-on-year earlier in the week,''
However, a £270 million charge for a lawsuit related to Shell's 2004 reserves' overbooking scandal and a cut in the company's 2006 output target reminded investors that Shell still faces big problems. And chief executive Jeroen van der Veer was forced to fend off questions related to alleged safety fears in the North Sea, specifically the recent allegations by former engineer Bill Campbell in a BBC documentary.
Campbell said last month he believed the company's failure to implement the findings of a report he compiled had led to the deaths of two technicians on the Brent Bravo platform in 2003.
Keith Moncrieff, 45, and Sean McCue, 22, died when a cloud of hydrocarbon gas leaked from a broken valve while they were inspecting a utility leg.
Van der Veer said the group had rejected the allegations in a letter to Upstream magazine, but added: ''We always keep the pressure on safety and have a good record in comparison to our competitors - if not, then very good.''
The controversy has overshadowed Shell's most recent gesture of commitment towards the North Sea - a £25m investment in a new technical campus in Aberdeen. The group said in December it would cut back its exploration plans in the area following a tax hike by Chancellor Gordon Brown.
Shell further cheered shareholders by keeping its 2006-7 spending plans fixed, despite rampant sector cost inflation - up 36 per cent in the second quarter on higher rig hire costs and soaring steel prices. But the group's production of oil and gas disappointed, falling 8 per cent to average 3.253 million barrels of oil equivalent per day (boepd) in the second quarter, below an average forecast of 3.315 million boepd.
This was due to the loss of 177,000 boepd in Nigeria because of civil unrest, and production sharing contracts under which Shell's volume of oil from a field drops as oil prices rise.
''If the market is to focus on any negatives it will be production ... This is the fourth straight year of production declines since output peaked at 3.96 million boepd in 2002,'' Citigroup said in a research note.
As analysts expected, Shell cut its 2006 output target to around 3.4 million boepd from 3.5 million to 3.6 million boepd.