Oil giant Royal Dutch Shell disappointed the City yesterday despite racking up profits of £17.1 billion last year.
The figure was 6% lower than a year ago after a weaker-than-expected performance from its production arm in the final quarter.
Chief executive Peter Voser said the company faced a year of headwinds in 2012 but its strategy was one “others can’t easily repeat”.
Refining operations returned to profit in the quarter, but analysts were more concerned about earnings from its upstream division which fell 14% to £2.8bn.
Shell blamed the quarterly decline on higher costs and exploration expenses.
Production rose 3.3% to 3.41 million barrels of oil or gas equivalents per day, reflecting start-ups in Qatar and Australia against declines at existing fields.
The company’s refining arm made profits of £761m, compared with a loss of £176.3m last year.
Shell has sold assets in recent years as it looks to improve financial headroom for projects with greater growth potential.
Capital investment in the final quarter was £8.2bn, bringing the total for the year to £23.3bn.
The firm raised £1.2bn from asset sales in the quarter.
Shell said it had around 30 projects under construction fields that could eventually return seven billion barrels of resources and drive the company’s financial and production growth in years to come.
Mr Voser said: “Shell is competitive and innovative. We are delivering a strategy that others can’t easily repeat, with unique skills in technology and integration and a worldwide set of opportunities for new investment.”
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said the figures had failed to inspire the market.
He added: “There are certainly positives within the statement. Refining margins improved in the last quarter, the company’s increased investment is part of a long-term strategy, and the accompanying management comments were upbeat on future prospects.
“However, the overall profit number was shy of expectations, costs are on an upward trend within the industry and the weakness of the gas price has impacted on Shell, which for the first time sold more gas than oil last year.”