Higher oil prices see Royal Dutch Shell's profits soar

As Royal Dutch Shell announces positive Q2 results Graham Spooner, investment adviser at The Share Centre, explains what it means for investors.

"Royal Dutch Shell reported that Q2 net profits almost doubled to $8.66bn from $4.39bn last year, helped by the soaring oil prices. Contributions from its flagship operations in Canada and Qatar also provided a boost and upstream business earnings increased to $5.42bn from $3.26bn last year.

"Investors will be pleased to see the company's performance focused strategy is on track. Royal Dutch Shell has invested in new projects this year to drive production which has been performing well and they plan to increase the activity. The growth plans could increase cash flow by 50% by 2012 if oil averages $60 a barrel and at $80 a barrel we could see an 80% increase.

"The company's performance has seen a steady improvement over the last few years and we feel there is more to come. Income seeking investors will be attracted to the company's yield of over 4%. The shares are viewed as a core holding for any blue chip income geared portfolio and we continue to recommend investors ‘buy' Royal Dutch Shell. UK investors should buy the ‘B' stock as they are not liable to Dutch tax."