Oil companies set to announce huge increase in second-quarter profits

BRITAIN’s three biggest oil companies are set to reveal a big jump in profits this week, driven by high oil prices.

Royal Dutch Shell (RDS), BP and BG Group are expected to post profits totalling $15bn (£9.2bn) for last financial quarter, helped by oil prices that rose to an average $117 a barrel throughout the quarter.

Shell is anticipated to report on Thursday that it has more than doubled profits in its second quarter to $6.7bn.

Its focus will be on the delivery of its key growth projects that could see the group add 1m barrels of oil per day (boe/d) of new production by the end of 2012.

“Given where the oil price is currently and market expectations for it to stay above US$100/bbl RDS could see a surge in cash flow if its new projects deliver and justify a premium rating to BP and Total,” according to Evolution Securities.

BP is expected to lag slightly behind when it reports tomorrow, with profits of about $5.8bn, up from a $17bn loss in the same quarter last year following the Gulf of Mexico oil spill.

Bob Dudley, who earlier this year replaced Tony Hayward as chief executive, is under growing pressure to clear up a confused strategy and revive the oil giant’s share price. Its second-quarter earnings will reflect a drop in production after it sold more than $25bn of producing assets to pay for the cost of the US spill.

Meanwhile, BG, it smaller rival, is expected to report a 50 per cent increase in its profits to $2bn in the quarter, compared with last year.