Royal Dutch Shell Plc (RDSA), Europe’s biggest energy company, said investment will increase after fourth-quarter profit missed analyst estimates on weaker North American fuel prices.

Excluding one-time items and inventory changes, profit was $5.6 billion. That was below the $6.2 billion average estimate of 11 analysts surveyed by Bloomberg. Net capital spending of about $33 billion this year compares with $30 billion in 2012.

Higher costs of getting oil and gas to production are offsetting gains from rising output and record Brent crude prices. Chief Executive Officer Peter Voser is trying to appease investors by raising the dividend in the first quarter, and he expects to increase output to about 4 million barrels of oil equivalent a day in 2017 from 3.3 million barrels last year.

“The 2013 capex is a negative surprise,” said Stuart Joyner, an analyst at Investec Securites Ltd. in London.“Spending is set to be higher, for longer.”

Net income rose 3 percent to $6.7 billion in the last three months of 2012 from a year earlier. Full-year earnings fell 14 percent to $26.6 billion from 2011.

Shell expects to announce a dividend of 45 cents a share for the first quarter of 2013, a 4.7 percent increase from the fourth quarter’s 43 cents. Fourth-quarter production rose to 3.4 million barrels a day from 3.3 million a year earlier.

The shares fell 1.5 percent to 2,272 pence, the lowest since Nov. 16, as of 8:21 a.m. in London trading. Shell is the first of the world’s biggest oil companies to report fourth-quarter earnings. Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) give their results tomorrow. BP Plc (BP/) reports Feb. 5.

Highest Ever

Shell produced more gas than oil for the first time last year as the gap between prices for the two fuels widens. Brent crude prices were the highest ever on average last year at $111.68 a barrel. At the same time, the average cost of New York-traded West Texas Intermediate retreated to $94.15 a barrel from $95.11. U.S. natural gas prices declined to $2.83 per unit, the lowest since 1999.

Profit in the unit that produces oil and gas slipped 14 percent in the fourth quarter from a year earlier. The refining unit returned to profit after a loss a year ago. Sales of liquefied natural gas rose 13 percent to 5.5 million tons.

Shell will raise exploration spending to $7 billion this year from $6.4 billion in 2012. It expects to drill more than 40 high-potential wells in 18 basins as well as test 10 tight gas and liquid-rich shale resources.

Costs Rise

“Costs are on the rise in some areas because clearly invesments are going up,” Voser said in an interview with Bloomberg Television. “It’s never been as high as at the moment in the industry,” though Shell’s costs are rising more slowly than average, he said.

Prices received for liquids slipped 1 percent in the fourth quarter from a year earlier, driven by a drop in Canadian prices. Global gas realizations climbed 3 percent as a 4 percent drop in U.S. prices was offset by a 3 percent gain elsewhere.

A year ago Voser forecast 50 percent higher operationalcash flow through 2015 on new projects. The Anglo-Dutch company, which scaled back shale-gas drilling in the U.S. to focus on oil, bought liquids-rich acreage in Texas for $1.9 billion fromChesapeake Energy Corp. (CHK) in September.

‘On Track’

Raising the dividend “shows the confidence in our plan,”Voser said. “We’re on track to deliver.”

Shell faced a setback in Alaska when a Kulluk drilling rig broke free from its tugboat on Dec. 31 and ran aground on an uninhabited island. The company has spent $4.5 billion and seven years in pursuit of oil beneath the Chukchi and Beaufort seas in the Arctic Circle.

Refining margins improved in the fourth quarter. BP’s refining marker margin, a global indicator of profitability, was $13.17 a barrel in the fourth quarter compared with $9.08 a year earlier. Shell’s 2011 fourth-quarter profits were hampered by a loss in refining.