Shell, Italy's Eni top forecasts

The world's biggest oil companies reported sharply higher third-quarter profits on Thursday, beating analysts' forecasts as they benefited from higher oil and gas prices and fatter refining margins.

Exxon Mobil Corp. (XOM-N), the world's largest non-government controlled oil company, said net income rose 55 percent to $7.35 billion US compared with the same quarter in 2009, ahead of forecasts of $7.26 billion. Revenue grew 16 percent to $95.3 billion.

Royal Dutch Shell Plc (RDS.B-N), industry number 2 and Europe's largest oil company by market value, said net income on a current cost of supply (CCS) basis rose 18 percent to $3.52 billion.

The company's underlying result was up 88 percent on a year ago after stripping out one-off items and over $1 billion in non-cash charges, mainly related to writedowns in the value of refining assets.

Italy's Eni SpA also comfortably beat analyst forecasts with a 47.5 percent rise in adjusted, or underlying, net profit to 1.7 billion euros.

China's Sinopec, Asia's largest refiner and an emerging oil producer, said net profit rose 15 percent.

Underpinning the results were a 12 percent rise in crude prices compared with the third quarter of 2009, driven by economic recovery worldwide and particularly strong demand from China, which became the world's largest energy user this year.

Higher natural gas prices -- up 29 percent in the U.S. and double third quarter 2009 levels in the UK -- also helped.

ConocoPhillips, the third-largest U.S. oil company, said on Wednesday its quarterly profit more than doubled, beating analyst predictions.

OIL SPILL AFTERMATH

Aside from the benign operating environment, Shell boosted profits with cost cuts and a 5 percent rise in oil and gas production to 3.1 million barrels of oil equivalent per day (boepd), just ahead of forecasts.

Shell's output has fallen sharply in recent years and strong gains in recent quarters suggest the company has turned the corner to growth, analyst Peter Hitchens at brokerage Panmure said.

Exxon's output jumped 21 percent, thanks largely to its acquisition of U.S. natural gas producer XTO Energy.

Eni said output rose 1.5 percent.

Shell and Eni said their output was hit by the U.S. deep water drilling moratorium, imposed because of the BP Plc oil spill and which ended earlier this month.

Shell's chief financial officer, Simon Henry, said the drill ban forced Shell to idle rigs in the Gulf of Mexico at a cost of $115 million so far this year.

Cancelled drilling plans and expected delays in receiving new drilling permits will likely reduce the company's 2011 output by 40,000 barrels per day, Henry told a conference call with reporters.

Shell is the second-largest producer in the deepwater of the Gulf behind BP, whose blown-out Macondo well caused the U.S.'s worst ever oil spill this summer.

The companies all enjoyed big rebounds in earnings at their refining units in the quarter compared with the same period last year. However, analysts are not sure it will last.

"Our outlook for refining, and European refining in particular, remains very cautious," analysts at Bernstein said in a research note.

Simon Henry said Shell hoped to benefit from lower prices in the oil services market as it plans new projects. A collapse in crude prices in 2008 ended years of rampant inflation in the prices of the goods and services which oil companies buy.

However, French oil services group Technip said on Thursday it expected margins to be higher than earlier expected in 2010, while on Wednesday Italian rival Saipem also said margins could rise, pointing to higher input costs for the oil majors.

Shell's CCS earnings strip out unrealized gains or losses in the value of inventories related to changes in oil prices, and are comparable with net income under U.S. accounting rules.