Royal Dutch Shell plc on Thursday posted a solid 15% increase in quarterly profits from a year ago, and growth from new natural gas projects helped to lift overall output by 5%.

Net profits for 2Q2010 totaled $4.39 billion, ahead of $3.82 billion in 2Q2009 when the financial markets were at a low point. Revenue jumped 42% to $90.56 billion from $63.9 billion. As strong as the latest quarter’s results appear, Shell earned $7.9 billion in 2Q2008, which was up from $7.6 billion a year earlier.

Gas production in its Americas operations in the latest quarter jumped to 8,440 MMcf/d, compared with 7,544 MMcf/d a year ago. U.S. gas output was up at 1,783 MMcf/d versus 1,056 MMcf/d. The company also sold 3.88 million tons of liquefied natural gas in period, up from 3.06 million tons. Total worldwide production was 3.11 million boe/d in 2Q2010.

The production gains were complemented with operations success as well, with an internal restructuring completed well ahead of schedule, said CEO Peter Voser. Among other things, the worldwide workforce has been reduced by 7,000 about 18 months earlier than planned.

“We have exceeded the targets we set last year for costs and staff reduction,” Voser said during a conference call with financial analysts. “We are putting new emphasis on continuous improvement, which will drive competitive financial and operating performance.” The restructuring to date has “delivered over $3.5 billion of annualized underlying savings.”

Shell also accelerated a plan to sell noncore assets; between now and the end of 2011, $7-8 billion of properties will be up for sale, which is more than double a previous target of $3 billion, said Voser.

At the same time, Shell continues to be a frequent buyer of North American gas assets. In late May it agreed to pay $4.7 billion to acquire subsidiaries of privately held East Resources Inc., instantly giving it substantial access to the Marcellus Shale and increased exposure in the Eagle Ford Shale (see Daily GPI, June 1). East has been a major player in the Pennsylvania portion of the Marcellus Shale, with 1.05 million net acres. Shell also is gaining 250,000 net acres in the Eagle Ford play.

ExxonMobil Corp. and ConocoPhillips have reported that to date the deepwater drilling moratorium in the Gulf of Mexico has not weighed on earnings. However, Shell’s deepwater Perdido Development, launched just two weeks before the Deepwater Horizon explosion (see Daily GPI, April 5), was shut down in late April, partly because of the moratorium, CFO Simon Henry told analysts. It will resume production at a slower-than-expected rate in October.

Maintenance work at the development caused some of the delays, but the drilling ban also has prevented the producer from drilling production wells connected to the platform, Henry said. Perdido was built to produce annual peak production of more than 200 MMcf/d of gas and 100,000 b/d of oil. Because the development was not operating at full capacity at the time of the shutdown, the impact on Shell’s production this year is expected to be around 8,000 boe/d, or about 0.25% of the company’s 2Q2010 production, said Simon.

The drilling moratorium also has forced Shell to idle seven drilling rigs in the deepwater and to write off $56 million in quarterly results, said the CEO. However, Shell has no plans to move the rigs out of the Gulf of Mexico., even though they can cost as much as $500,000 a day.

“A six-month moratorium is too short to make it economically attractive to move the rigs,” Simon said. In some cases, the producer has been able to negotiate 60-70% reductions in the daily costs of leasing the rigs.

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