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Shell Q4 profits fall on weaker crude

Oil major Royal Dutch Shell Plc said fourth-quarter Current Cost of Supply (CCS) net profit fell 28% to $4.79 billon as crude prices collapsed, but it still managed to raise its next dividend.

Excluding one-off items and certain non-cash accounting charges, which amounted to a net gain of $897 million, the fourth quarter CCS result was $3.89 billion, below an average forecast of $4.1 billion from a Reuters poll of six analysts. The world's second-largest non-government controlled oil company by market capitalization said full-year CCS net profit was $31.4 billion in 2008, a European corporate record, analysts said, and up from $27.6 billion in 2007.

The Anglo-Dutch oil major proposed raising its first quarter dividend for 2009 by 5% to $0.42 per share.

Some investors feared the collapse in crude prices from a record above $147/bbl in July to around $42/bbl on Thursday, and big capital investment commitments might make it hard for Shell to meet its big dividend payments.

“I think the most important thing was that they increased (the expected first quarter 2009 dividend) by 5%, which is a sign that management has confidence in the business going forward at the current oil price,” Peter Heijen, oil analyst at Theodoor Gilissen.

Shell said production of oil and gas was essentially flat in the quarter compared with the same period in 2007 at 3.415 million barrels of oil equivalent per day.

Shell's oil sands unit, which produces crude from bitumen-drenched soil, swung to a $30 million loss in the quarter, despite a 44% increase in bitumen production, emphasizing how the lower oil price has hit this high-cost business.

In recent years, Shell has invested heavily in capital and energy-intensive unconventional hydrocarbon sources such as Canada's oil sands.

A Shell spokesman added that the company also took a $351 million charge related to currency effects. (Reuters)