THE HAGUE, the Netherlands ( TheStreet) -- Royal Dutch Shell ( RDS.A), the No. 1 oil company in Europe, said third-quarter net profit rose 7% to $3.46 billion as oil prices rose.

Net profit rose from $3.25 billion in the same period in 2009.

Shell said revenue in the quarter rose 21% to $90.7 billion.

"Our results have rebounded substantially from year-ago levels, driven by some improvement in industry conditions, and Shell's strategy. We are seeing new growth, with improved earnings and cash flow, underpinned by a 5% increase in oil and gas production, a 22% increase in LNG sales and increased downstream volumes," said CEO Peter Voser, in a statement Thursday.

Shell took a net charge of $1.41 billion for oil inventory that has fallen in value, mostly at its refining arm, compared to a net gain of $371 million in the third quarter a year earlier. Stripping out inventory effects, earnings would have risen 18%.

The company produced 3.06 million barrels of oil and equivalents per day, up 5% from a year earlier. The company reported production earnings doubled to $3.15 billion from $1.54 billion, helped by higher oil prices, lower costs, and lower exploration spending.

Global oil prices were up more than 10% from the third quarter of 2009.

Meanwhile, Shell's refining earnings fell to $325 million from $1.29 billion, due mostly to the inventory effect.

Earnings rose to 56 cents on a per-share basis from 53 cents last year. Shell kept its dividend at 42 cents.

-- Written by Joseph Woelfel

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