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Oil price and output surge drives Shell profits up 18%


Royal Dutch Shell said its profits jumped in the third quarter after it benefited from higher oil prices and a 5% rise in production.

The group posted profits of $3.5bn (£2.2bn) for the three months to September 30, an increase of 18% on a year earlier, although this was down on the second-quarter haul of $4.5bn.

The figure, which exceeded City forecasts, also reflected progress on Shell's $3.5bn cost-saving plan, which has seen 7,000 jobs go.

Chief executive Peter Voser said: "Our results have rebounded substantially, driven by some improvement in industry conditions, and Shell's strategy.

"We are making good progress against our targets, and there is more to come from Shell," he added.

Profits were helped by higher oil and gas prices than in 2009, when much of the global economy was still in recession.

Upstream exploration and production profits more than doubled on a year ago to $3.1bn (£2bn), but refining earnings were sharply lower as a result of continued difficult industry conditions.

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In contrast to BP, which has stopped paying dividends in the wake of the Gulf of Mexico disaster, Shell said it paid $2.6bn (£1.6bn) to its shareholders during the third quarter.

The payout underlines the sudden switch in momentum between the firm and its rival, triggered by the Gulf catastrophe.

Under chief executive Tony Hayward - who resigned last month - BP had closed the gap on Shell after years of under- performance, before the Deepwater Horizon crisis erupted in April.

Shell lagged behind BP in its response to the economic downturn, but Mr Voser said it was making good progress in implementing the company's strategy, including up to $8bn (£5bn) of asset sales as it refocuses its portfolio on projects with higher growth potential.

Tony Shepard of Charles Stanley stockbrokers said profits were between 10% and 15% better than market expectations. He added: "The share price has underperformed the wider stock market by 7% over the last 12 months but this could reverse as the group begins to deliver on its strategy."