Royal Dutch Shell Plc said second-quarter current cost of supply (CCS) net income jumped 94 percent to $4.53 billion thanks to a strong operating environment and a speedy restructuring of the group.

Europe's largest oil company by market value said it had cut $3.5 billion in costs and 7,000 jobs, exceeding earlier targets, and allowing it to wrap up its overhaul six months quicker than planned.

The Netherlands-based company added that it would boost asset sales, echoing a strategy announced earlier this week by rival BP .

BP's main aim is to pay costs related to its oil spill in the Gulf of Mexico but it also wants to try to upgrade its portfolio of fields and offer better growth.

Shell's delivery window is ongoing and 2011 should be a transformational year for operational upside and cash flow said Jason Kenney, oil analyst at ING in Edinburgh.

Shell's London-listed B shares traded up 0.2 percent at 3:51 a.m. ET against a 0.3 percent drop in the STOXX Europe 600 Oil and Gas index <.SXEP>.

Shell's year-on-year profit growth was flattered by some big non-cash charges in the second quarter of 2009.

Excluding such non-operating items, the result grew 34 percent to $4.21 billion, beating an average forecast of $3.99 billion from a Reuters poll of 10 analysts.

London-based BP's underlying result rose 77 percent while ConocoPhillips, the third-largest oil company in the U.S., said underlying profit rose 150 percent.

CCS net income strips out non-cash gains or losses related to changes in the value of fuel inventories, and, as such, is comparable to net income under U.S. accounting rules.

In a sign that Shell is getting to grips with a 7 year decline in oil and gas production, the company said output rose 5 percent compared to the same period in 2009, to average 3.11 million barrels of oil equivalent per day (boepd) in the quarter -- the second consecutive quarter of strong growth.

However, the portfolio is becoming increasingly focused on gas, which traditionally has offered weaker returns than crude.

Oil represented around 53 percent of total production in the quarter, against 59 percent in the same period last year. The shift was driven partly by a 34 percent jump in volumes of liquefied natural gas.

Profits were boosted by a benign operating environment.

The price Shell received for its oil rose 41 percent in the quarter, compared with the second quarter of 2009, while gas prices were 15 percent.

Refining margins and retail fuel sales also rose.

Shell gave a cautious outlook on the global economic environment and for fuel demand.

We continue to see mixed signals in the global economy. Oil prices have remained firm so far this year, but refining margins, oil products demand and natural gas spot prices all remain under pressure ... the outlook remains uncertain, Chief Executive Peter Voser said in a statement.

(Reporting by Tom Bergin, editing by Will Waterman and Andrew Callus)

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