Shell profits up on high oil prices

By Tom Bergin

LONDON (Reuters) - Royal Dutch Shell reported a 5 percent rise in second-quarter current cost of supply (CCS) net income to $7.9 billion (3.99 billion pounds), and said it beat analysts' forecasts, on the back of high oil prices.

The world's second-largest non-government controlled oil company by market value added on Thursday it was raising its investment budget for 2008 to over $40 billion to cover rising costs and the weak dollar, and to make acquisitions.

Shell's "A" shares traded up 1.25 percent at pence at 8:46 a.m., underperforming a 1.89 percent rise in the DJ Stoxx European oil and gas sector index.

A spokesman said Shell's underlying results had increased 24 percent to $8.6 billion, after excluding $750 million in non-cash charges, beating an average forecast of $8.3 billion from a Reuters poll of nine analysts.

Rival BP reported a 61 percent rise in underlying second-quarter profits on Tuesday.

Not all analysts agreed with Shell's exclusion of the charges from the underlying result, as they sat outside the normal description of non-operating items, while those who accepted the numbers criticised the way they were presented.

"It's a bit confusing," one analyst said. "I'm not sure why they've done it like this."

Shell said oil and gas production fell slightly to 3.126 million barrels of oil equivalent per day (boepd) in the second quarter 2008, from 3.178 million boepd in the same quarter last year.