May 4 (Bloomberg) -- Royal Dutch Shell Plc and Total SA reported first-quarter profit rose, beating analysts' forecasts, as near-record oil prices compensated for declining production.
Shell's net income increased 3 percent from a year earlier to $6.89 billion, or $1.05 a share. Total's earnings excluding changes in the value of a stake in drugmaker Sanofi-Aventis SA gained 16 percent to 3.38 billion euros ($4.27 billion), or 5.78 euros a share.
The world's five largest oil companies earned about $29 billion in the period, or $4.46 for every person on Earth, as oil prices headed toward last month's records of more than $75 a barrel. Governments from Washington to Moscow are seeking a greater share of the surging profits.
``You have to be concerned'' that governments will increase taxes, said Roger Nightingale, a strategist for Millennium Global Investments in London, which oversees $4.3 billion. ``Oil prices and revenues have risen sharply.''
Shell's London-traded `A' shares advanced 18 pence, or 1 percent to 1,878 pence at 12:12 p.m. local time, taking their gain this year to 6 percent.
Shell has ``got things back on track to some degree,'' said Neil McMahon, an analyst at Sanford C. Bernstein in London, who rates Shell ``market perform.''
Shares of Total advanced 4.2 euros, or 1.9 percent, to 222.9 euros. Total's stock is up 5 percent this year.
`Very Good Results'
``These are very good results for Total and better than expected,'' said Nathalie Pelras, a fund manager at Richelieu Finance in Paris, which oversees about $5 billion in assets, including Total shares.
BP, the largest oil company in Europe, said April 25 its first-quarter earnings dropped to $5.62 billion after taxes rose and Gulf of Mexico production fell. Two days later, Exxon Mobil, the world's biggest oil company, reported first-quarter profit increased to $8.4 billion. BP's shares are up 10 percent this year. Exxon Mobil's have gained 14 percent.
Shell's profit excluding changes in inventory values rose 12 percent to $6.09 billion, compared with a median forecast of $5.67 billion from seven analysts surveyed by Bloomberg News.
Shell's profit gain was a ``positive surprise,'' driven partly by higher than expected profits from the company's Gas & Power division, including record sales of liquefied natural gas, said Citigroup Inc. analysts including Jonathan Wright in a note to investors. Wright has a ``hold' recommendation on the stock.
Production Declines
Shell's oil and gas production fell 3 percent from the year-earlier quarter to 3.75 million barrels a day of oil equivalent. Excluding hurricane and pricing effects, output would have been up 1 percent on the year, Shell said. Total's quarterly production dropped 5 percent to 2.44 million barrels a day.
Total reconfirmed its goal to boost production by about 4 percent a year through 2010, Robert Castaigne, chief financial officer, said in a conference call with journalists.
Shell made no change to its production estimates for this year and said it expects to pump between 3.8 million and 4 million barrels a day in 2009.
The oil company said it's less likely to reach a target of ``at least'' replacing all the oil it pumps from 2004 through 2008 because rising costs are delaying some projects.
Shell said today it will probably postpone some projects because of shortages to materials and high contract rates.
``That in turn makes achieving our SEC proved reserves replacement forecast less likely than it was,'' Shell said. Competition for materials and skilled labor means it will probably delay some longer-term projects. It didn't specify which ones.
Shell may delay its Pearl gas-to-liquids project in Qatar, a project to make diesel from natural gas, because of increased prices for construction services, three contractors with knowledge of the project told Bloomberg yesterday. The cost had already risen by at least a fifth to $6 billion in two years.
----With reporting by Jeremy Naylor and John Dawson in London. Editor: Carrigan.
