Reply #7: Shell posts biggest ever UK company profit

[EuroObserver]

LONDON (Reuters) - Royal Dutch Shell posted a record profit for a UK-listed company on Thursday, helped by high oil prices and strong refining margins. The company reported a 3 percent rise in fourth-quarter current cost of supply (CCS) net profit to $5.395 billion (3.04 billion pounds), in line with forecasts. Excluding a net gain of $34 million related to exceptional items, the result was in line with a Reuters poll of 10 analysts which gave an average forecast of $5.385 billion, and up around 13 percent from the post-exceptionals result last year.

Shell (RDSa.L: Quote, Profile, Research) said production fell to 3.5 million barrels of oil equivalent per day (boepd) in the quarter from 3.84 million boepd in the same period of 2004.

Full-year CCS net profit for 2005 was $22.94 billion, a record for a UK-listed company, analysts said. The world's third-biggest listed oil firm by market value said it expected to return $5 billion to shareholders by repurchasing stock in 2006, in line with last year's share repurchases.

Shell said its reserve-replacement ratio -- the rate at which it matches the oil it pumps with new finds -- was 70 to 80 percent, including mineable reserves from Athabasca Oil Sands and year-end pricing impact and acquisitions and divestments. Companies target a rate of at least 100 percent to avoid depletion of their asset base and the suggestion their business is eroding. Shell is under pressure from investors for its poor reserve-replacement rate after achieving a ratio less than 50 percent in 2004. Analysts believe this shows Shell will struggle to grow its upstream oil and gas production business in coming years.

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