Royal Dutch Shell has shrugged off the effects of lower oil prices to report a surprise rise in profit for the first three months of this year.
The Anglo-Dutch firm said net profit measured by current cost of supply for the first quarter was $6.9bn (£3.46bn), up from $6.1bn a year earlier. Analysts had forecast Shell's profit would be closer to $5.6bn.
Rival BP recently posted a 17% earnings drop for the same period, as lower oil prices and production hit home.
In London, Shell's shares opened 3.9% lower on disappointing expectations, but recovered in early trade, to trade up 1.7%
'On the turn'
Earnings from production of oil and gas were lower than the first quarter last year, reflecting higher costs, lower prices and lower volumes. But this was offset by higher margins for oil products and chemicals.
Analysts say Shell has largely recovered from a scandal dating back to 2004 when the firm overvalued oil and gas reserves by 20%, shocking investors. "It seems to be a company on the turn," said Tony Alves, an analyst with KBC Peel Hunt.
Crude oil production was partially affected by damage to the company's operations in Nigeria, where attacks on pipelines and offshore platforms have been common over the past year.
At the end of the quarter, Shell continues to lose 188,000 barrels per day in the Niger Delta and management said no firm date could be given for a return of full production.
Last month, Royal Dutch Shell ceded a large portion of its 55% stake in the Sakhalin project in Russia to Russian energy giant Gazprom after being accused of breaking environmental laws in the country.
Gazprom paid $4.1bn for the 50%-plus-one-share stake, which will be accounted for in Shell's second-quarter results
(BBC News, 03/05/2007)