Embattled oil firm Royal Dutch/Shell bowed to investor pressure for a share buyback today and increased planned capital spending for 2004 after posting first quarter results at the top of analysts' forecasts.
Shell shares were up 2.6 per cent at 396-3/4 pence in early trading while Royal Dutch added 2.3 per cent to €41.29, as investors sensed a recovery from the reserves scandal that has knocked confidence in the world's third largest oil firm.
Adjusted net profit on a current cost of supply basis was $4.251 billion, up 9 per cent on a year ago thanks to slightly stronger crude oil prices, higher refining margins and a better chemicals performance, but somewhat offset by weaker natural gas prices.
The figure was also inflated by a $350 million gain from the sale of its stake in Chinese firm Sinopec, a sum some analysts had excluded from their calculations. However, even stripping this out, the result was still well ahead of the average $3.6 billion forecast.
The bulk of forecasts ranged from $3.2-$4.1 billion. "All we've seen is buyers this morning in Shell including a couple of hedge funds and long-only funds. There are a couple of exceptionals in the numbers but the buyback is supportive," said one senior trader.
The Anglo-Dutch firm is still reeling from the January disclosure that it overbooked proved reserves by 20 per cent.