LONDON -- The shares of Royal Dutch Shell (LSE: RDSB.L) (NYSE: RDS-B) rallied 18 pence to 2,208 pence during early London trade this morning after the oil group issued results that looked to underpin a P/E of eight.

The FTSE 100 (UKX) member said underlying profits during the third quarter fell 6% to £6.6 billion when compared to last year, but were 15% higher than the £5.7 billion reported during the preceding second quarter.

Shell also reported underlying earnings for the first nine months of the year of $3.13 per share, which when annualized supports current City projections of $4.26 -- or roughly 266 pence -- per share for 2012 as a whole.

In addition, today's third-quarter figures revealed operating cash flow of nearly $10 billion, net capital investment of $8 billion, a return on capital employed of almost 13% and gearing of about 9%.

Production during July, August, and September reached almost 3 billion barrels of oil a day -- up 1% on the same three months of 2011.

Peter Voser, Shell's chief executive, said:

Our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in Integrated Gas and Oil Products.

Shell is driving a long-term and consistent strategy, against a backdrop of volatile energy markets. Our profits pay for substantial investments in new energy supplies, and they pay dividends for our shareholders.

Shell's quarterly dividend was maintained at $0.43 per share, suggesting the full-year payout could be approximately 108 pence per share and supply a 4.9% income.

Whether Shell is a "buy" based on today's Q3 statement, those ratings and the general outlook for the oil sector remains your decision.

In addition, something to bear in mind with that P/E of eight is Shell's enormous capital expenditure. During 2010 and 2011, the group's annual capex came to $26 billion, though the impact on reported profits through the depreciation charge averaged only $15 billion.

Nonetheless, Shell remains one of a number of FTSE large-caps that offers a dividend income well ahead of what you can expect to receive from a standard savings account.

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