Oil giants Royal Dutch Shell and BP beat forecasts by reporting big rises in first-quarter earnings Tuesday, lifting shares across the sector as investors bet oil prices above $100 a barrel would be an even bigger bonanza for the industry than expected.
Shell, the world’s No. 2 nongovernment-controlled oil company, said net income, excluding unrealized gains from changes in inventory values, rose 12% to a record $7.8 billion.
Industry No. 3 BP said its profit, calculated on the same basis, rose 48% to $6.6 billion. Excluding one-time items, both companies outperformed analysts’ forecasts by more than $1 billion.
“It’s an eye-opener for investors, showing what the high commodity price environment really, really means in terms of earnings for the oil sector,” Paul Andriessen, oil analyst at Fortis Bank in Amsterdam.
The companies’ core oil and gas production units were the main drivers of the bumper earnings, thanks to oil prices that averaged almost $100 a barrel during the quarter, and strong gas prices in the U.S. and Europe.
Oil and gas production was flat at both companies.
Refining profits held up better than expected despite high crude prices.
Shell’s U.S.-traded shares rose $3.47, or 4.5%, to $80.19, while BP’s U.S.-traded shares gained $3.20, or 4.6%, $72.18.