The Scotsman: Oil majors show the extremes of fortune

MARTIN FLANAGAN

CITY EDITOR

26 April 04

OIL giants with currently contrasting fortunes, BP and Shell, will lead a string of FTSE 100 players in Q1 trading updates this week.

BP, in stark contrast to its struggling rival Shell, has flagged its success in replacing its reserves, and total production in the first three months of 2004 should be 11 per cent higher than a year ago. There is expected to be a strong contribution from its Russian joint venture, TNK-BP.

Margins have also improved in its refining and marketing business in past months, while analysts expect BP to report flat underlying profits at its chemicals arm compared with the same period last year.

Its first-quarter results on Tuesday should report pre-tax profits of $5.29 billion (£3bn) against $5.6bn (£3.2bn) a year ago.

There may also be further news on BP’s ongoing share buyback programme.

By contrast, embattled Shell, haemorrhaging senior management and credibility following the revelations of a cover-up of its reserves over-statement for nearly two years, will hope the market focuses on its wider trading performance. It puts out its first-quarter figure on Thursday.

Shell has already indicated that production volumes will be down 5 per cent compared with last year in the "upstream" exploration and production arm.

The underlying results of its "downstream" refining and marketing business are set to improve with a robust performance in the US and Asia.

Fund manager Gerrard expects Shell to report that first-quarter profits have fallen to $3.74bn (£2.23bn) from $3.94bn (£2.12bn) a year ago.

http://business.scotsman.com/topics.cfm?tid=1152&id=466392004