Royal Dutch Shell, the oil giant, reported profit more than doubled in the fourth quarter thanks to the rise in crude prices seen at the end of last year.
Current cost of supply earnings - the most closely followed oil industry earnings metric - rose 140% in the fourth quarter to $4.3bn. Over the year it rose to $15.76bn up 119% on 2016.
The fourth quarter earnings were even more impressive, given they included a non-cash charge of just over $2bn related to the US tax reforms. Shell has already declared President Trump's key policy triumph of 2017 will benefit it over the long term.
Higher energy prices
Shell's increase in profitability in the fourth quarter was mainly due to higher realised oil, gas and LNG prices, improved refining performance and higher production from new fields, the company said.
Indeed, Brent crude prices rose from a low near $44 a barrel in June to close to $70 in December, before tipping over the $70 level in January.
Cash flow from operations in the fourth quarter was $8.4bn, although this was lower than some expectations, including RBC Capital Markets' forecast of $10.3bn. Full-year cash flow rose to $35.7bn.
Meanwhile, the company's debt ratio fell to 24.8% at the end of 2017, down from 28% in 2016 thanks to rising commodity prices and a number of divestments made during the year. RBC, however, had expected the debt ratio to fall below 24%
RBC analyst Biraj Borkhataria said: "Royal Dutch Shell remains our preferred super-major, as we expect free cash flow to grow above and beyond its dividend commitments over the next few years, with a significant portion of the excess being delivered to shareholders via share buybacks."
Royal Dutch Shell chief executive Ben van Beurden (left) said: “2017 was a year of strong financial performance for Shell. A year of transformation, in which we showed we have what it takes to deliver a world-class investment case.
"We reported strong earnings for the quarter underpinned by continued delivery momentum. Cash flow reflected higher tax payments and increased cash requirements in relation to our trading business.
"We enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash.”
Investors were a little disappointed by the dividend, which Shell held at 2016 levels - 47 US cents for the fourth quarter and $1.88 for the full year.
Shares in the company fell 1.2% to £24.66 in early trade on the London Stock Exchange.
Picture courtesy of Royal Dutch Shell website