Net profit on a current cost of supply basis, excluding fluctuations in the value of inventories, rose by 9.0 percent to 27.564 billion dollars in the twelve months to the end of December, compared with 2006.
The record-breaking figures were recorded last year as oil prices raced towards 100 dollars per barrel.
"Overall these are satisfactory results," said chief executive Jeroen van der Veer in the earnings release.
"We made good progress in 2007, launched new projects upstream and downstream, and achieved exploration successes."
In the fourth quarter alone, net profit rocketed 60 percent to 8.467 billion dollars, compared with the same period of 2006, Shell added.
That was despite a 5.7-percent drop in production over the same three-month period to 3.436 million barrels of oil equivalent per day (boepd).
The price of New York's light, sweet crude oil traded between 85 dollars and 99 dollars per barrel in the three months to December. Earlier this month, prices had surged to an all-time pinnacle of 100.09 dollars.
Meanwhile, Shell added that fourth-quarter earnings on a CCS basis climbed to 5.737 billion dollars. That missed analysts' consensus forecasts of 5.826 billion.
The group also revealed that 2007 production dropped to 3.315 million boepd.
That compared with 3.473 million in 2006 and was at the bottom end of the company's own guidance of 3.3-3.5 million.
Shell forecast on Thursday that it would experience a modest decline in oil and gas production in 2008, chief finance officer Peter Voser said in a conference call to reporters.
That would mainly reflect the impact of asset disposals, the partial suspension of production in Nigeria, and the pricing effects of the company's production sharing contracts, Voser said.
Unrest in Nigeria, the world's eighth-largest crude exporter, slashed the country's output by a quarter in 2006 and 2007 to 2.1 million barrels per day, according to the latest estimates.
"Going into 2008, without giving any precise guidance, we expect production to be slightly below 2007," Voser added Thursday.
Over 180,000 boepd of the group's output remains shut in Nigeria because of continued violent attacks by militants on its oil facilities in the oil-rich Niger Delta region.
In London trading, Shell saw its 'A' shares fall 1.73 percent to 1,758 pence on the British capital's FTSE 100 index of leading companies, which in turn sank 1.44 percent to 5,753.50 points.
Shell also raised dividends for the fourth quarter by 11 percent to 0.36 dollars per share, and said it expected to lift the payout for the first quarter of 2008 by 11 percent to 0.40 dollars.

Copyright AFP (Agence France-Presse), 2008