Beleaguered oil group Royal Dutch/Shell will pay a combined $150m to settle investigations into alleged market abuse and reporting fraud by the UK and US regulators.

Royal Dutch/Shell said on Thursday it would pay a penalty of $120m to the US Securities and Exchange Commission, and £17m ($30m) to the Financial Services Authority.

The company said it would also spend another $5m on developing a comprehensive internal compliance programme.

Under the agreement in principle, Shell said it would make no admissions or denials against the finding by the SEC that the company violated the anti-fraud, reporting, record-keeping and internal control provisions of the US federal securities law.

Nor would it challenge or accept the FSA finding that the company breached market abuse provisions in the UK.

However it noted, in separately released results, that although a $120m provision would be made to cover legal and other costs, Shell management was “unable to estimate the range of possible losses from the entire set of regulatory and other actions and litigations” on the misstatement of oil reserves that began its woes earlier this year. There are three other inquiries pending.

As it sought to put the scandal behind it, Shell reported a 16 per cent rise in underlying second-quarter profits thanks to the “tailwind” of higher oil prices.

Net income was $4bn, up 54 per cent on the previous year, and this figure included a one-off charge of $141m related to a mark-to-market valuation of contracts, and another $330m related to the write-down of acquired Enterprise Oil assets.

Profits adjusted for the current cost of supply stood at $3.768bn, up 16 per cent. This compated with the range of expectations between $3.5bn and $4.3bn.

The rise in profits came despite a 5 per cent fall in production to 3.57m barrels, although Shell said it aimed to maintain 2004 production at 3.7m-3.8m barrels of oil equivalent per day. It promised no more than that level of production through to 2005-2006.

For investors in Shell Transport, the UK-listed arm of the Anglo-Dutch group, a dividend of 6.25p a share was declared, up 2.5 per cent. Shareholders in Royal Dutch will get €0.75 a share, up 1.4 per cent.