European integrated oil companies
Royal Dutch Shell
both reported Tuesday that their earnings for the first quarter of 2008 grew handily year over year thanks to sky-high worldwide prices for their crude and natural gas.
BP said it earned $7.62 billion, or $2.09 per ADS, compared with $4.66 billion, or $1.44 per ADS, in the first quarter of 2007. Analysts were expecting $1.74 per ADS.
Replacement cost profit, which excludes the mark-to-market gains, losses and tax effects of oil, gas and chemicals stored in inventory, was $6.6 billion, up 48% from $4.4 billion a year earlier. Replacement cost profit is considered to be a good performance indicator for oil and gas companies.
Core revenue for the quarter were $87.7 billion, up 43% from the first quarter last year. Total revenue, including income from jointly controlled entities and associates, was $89.2 billion, up from $62 billion a year earlier.
The company generated $10.1 billion in operating income from its exploration and production segment, an increase of 60% over the prior first quarter. "The result benefited from higher oil and gas realizations and a higher contribution from the gas marketing and trading and LNG businesses," BP said in a press release.
Refining and marketing income was $1.2 billion, up from $804 million during the same period last year. BP's refining profits rose in Europe and the U.S. but were down in the rest of the world.
BP spent $7.1 billion in capital expenditures during the quarter, which included a buyout of Husky Energy's interest in the Canadian tar sands. It also repurchased $1 billion of its common stock and paid out $2.6 billion in dividends.
Shares of BP were recently up 4.3% at $71.92.
Meanwhile, Royal Dutch Shell announced that its first-quarter earnings jumped 25% to $9.1 billion, or $1.47 a share, from $7.3 billion, or $1.16 a share, in the first quarter last year. Replacement cost profits grew to $7.8 billion from $6.9 billion.
The company generated revenue of $114.3 billion, up 66% from a year earlier.
"Good operating performance, combined with increased oil and gas prices, offset the impact of downstream conditions in the first quarter 2008," CEO Jeroen van der Veer said in a prepared statement.
E&P segment earnings were $5.1 billion, compared to $3.4 billion last year. The realized prices for Shell's production were 66% higher than last year, primarily because of the soaring prices for West Texas Intermediate crude and Brent crude.
Replacement cost earnings for Shell's refining segment were $1.2 billion, down from $1.5 billion a year ago. The segment's performance was negatively affected by lower realized refining margins and higher operating costs.
Shell spent $7.4 billion in capital expenditures, $1.1 billion on share repurchases, and $2.4 billion in dividends in the quarter.
Royal Dutch Shell was recently trading 4.8% higher at $80.39.
Following last week's positive earnings report by
, Tuesday's first-quarter earnings beats by both BP and Shell suggest that more upside surprises could lie ahead in this earnings season.
will reveal its quarterly performance figures on Wednesday.
will report its results on Thursday, and
results will follow on Friday.