Europe's biggest oil company Shell (RDS.B) posted the oil sector's standout third-quarter results, booking a sharper-than-forecast increase in profit and production, boosted by its acquisition of BG.
Net profit for the quarter, on a current cost of supplies basis and excluding one-time items, rose to $2.8 billion, up 18% on the same period last year and well ahead of the consensus expectation of about $1.7 billion. Earnings per share were 35 cents.
Shell's most commonly traded B shares climbed 3.3% in early trading on Tuesday to 2,184 pence (26.76).
The strong results provide a measure of justification for CEO Ben van Beurden's $54 billion gamble on the acquisition of gas group BG, which was finalized earlier this year. That deal boosted Shell's output, particularly in Australia and Latin America, while integration of the BG operations and the resultant cost cutting is ahead of schedule, according to the company.
"Shell delivered better results this quarter, reflecting strong operational and cost performance," said Van Beurden in a statement. "But lower oil prices continue to be a significant challenge across the business and the outlook remains uncertain."
Shell's results buck the trend of a difficult third quarter for European oil companies, which have been hurt by lower oil prices and lower-than-expected output. Brent crude traded at an average of $45.90 in the third quarter, marginally higher than the previous quarter's prices but down on the average of $50.50 in the third quarter of 2015.
Separately, on Tuesday BP (BP) reported a 49% decline in third-quarter profit on disappointing output, though it beat analysts' estimates largely due to a tax credit.