Royal Dutch Shell fell short of analysts' forecasts with a 22 per cent jump in underlying second-quarter profit on the back of high oil prices.
Shell said this morning its second-quarter current cost of supply (CCS) net profit, which strips out gains from the rising value of fuel inventories, was $4,626 million, up from $3,663 million for the same period last year.
Excluding a non-operating charge of $545 million, the "clean" CCS result, the measure most watched by investors, was $5,171 million.
Shell's shares opened lower following the results. Its A shares were down 1.1 per cent at 1,715 pence at 7.42am; its B shares fell 0.95 per cent to 1,773p.
The DJ Stoxx European oil and gas index was down just 0.34 per cent. The main driver of the profit increase was the upstream oil and gas exploration and production division, where profits rose sharply on higher oil prices.
Crude oil reached a record $60 a barrel in the second quarter. However, this unit, Shell's largest, was also the main source of underperformance, as analysts had expected Shell to reap even more benefit from the high price environment.
Shell said it was increasing its exploration spend for 2005 and 2006 to $1.8 billion annually, from $1.5 billion. It said it was increasing exploration activity but the rise could also be due to rampant inflation in the oil services sector.
Shell E&P Ireland is locked in a dispute with local landowners in Co Mayo over its plans to bring ashore gas at Rossport to a terminal site in Bellanaboy. Five protesters are in jail for contempt of court, and Shell has laid off 35 sub-contractor staff as a result of the dispute.
The protesters claim the proposed pipeline is not safe. Minister for Marine Mr Dempsey has commissioned a new safety report and the company has said it will suspend all operations on the pipeline, pending publication of the report.