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Shell quarterly profit falls
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November 1, 2001: 6:41 a.m. ET
Anglo-Dutch oil company posts first profit decline in two and a half years
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LONDON (CNN) - Royal Dutch Shell, Europe's biggest oil company, said on Thursday third-quarter profit fell for the first time in two and a half years as crude prices slid.
Oil prices have fallen sharply since September 11 as demand declines amid concerns global economic conditions will deteriorate further. Energy prices have fallen back from 10 year highs and refining margins have weakened.
Rival Exxon Mobil (XOM: down $0.01 to $39.45, Research, Estimates) posted a 23-percent drop in earnings, blamed crude oil pricing, especially in the latter half of September.
Crude oil prices hit a high of $29.43 on September 14 on concerns a U.S.-led attack on Afghanistan could lead to a wider Middle East conflict. Since then, crude oil prices have fallen almost a third to $20.29 on Thursday.
Shell, the world's No. 2 oil company said, third quarter net income, excluding one-time items, fell 17 percent to $2.69 billion from $3.25 billion in the same period a year ago. Analysts polled by Reuters had predicted earnings in the range of $2.55 billion to $3.04 billion.
Brent crude oil averaged over $25 dollars a barrel in the quarter, but Shell admitted the outlook was now "uncertain." Crude prices are close to their 10-year average of $19.50 as cracks appear in oil cartel OPEC's perceived ability to hold up the price.
Last month Shell cut its forecast for oil and gas production growth as supplies in the UK and U.S. decline. The Anglo-Dutch giant expects growth to average 3 percent a year up to 2005, from 5 percent previously.
Investors are placing increasing emphasis on growth in production, as recent industry-wide efforts to cut costs and falling crude prices have narrowed the scope for further profit increases from these sources.
Shell said third-quarter growth was fairly strong at 5 percent, led by a 21-percent improvement in gas volumes but dragged back by a three-percent decline in oil. Longer term though, the company has admitted it is struggling to keep growth going.
"We believe the figures are very encouraging in the light of current trading conditions and the continued uncertainty of the world economy," Chairman Philip Watts said.
Shares in Shell Transport & Trading (SHEL), which owns 40 percent of Royal Dutch/Shell Group, slipped 0.8 percent to 511 pence after the announcement. Royal Dutch, which owns the rest of the oil giant, lost 0.9 percent to  56 in Amsterdam. 
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