Shell sees 40 pct slide in fourth-quarter profits

Royal Dutch Shell has said it expects fourth-quarter profits to slide at least 40 per cent from a year ago following a collapse in crude prices that has hit industry revenues, leading to job losses and billions of dollars in spending cuts.

The Anglo-Dutch oil major, in a trading update ahead of a shareholder vote this month on its £36bn planned takeover of rival BG Group, forecast that earnings, on a current cost of supplies basis excluding exceptionals, would fall to between $1.6bn and $1.9bn, below the consensus view of analysts.

However, Ben van Beurden, chief executive, said he was “pleased with Shell’s operating performance in 2015, and the momentum in the company to reduce costs and to improve competitiveness”.

“Bold, strategic moves shape our industry. The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company and improve shareholder returns,” he said.

He reiterated Shell’s plans to reduce capital spending by 20 per cent to $29bn for last year from 2014 levels, and indicated that spending for the enlarged company would be $33bn in 2016, a reduction of about 45 per cent in combined spending, which peaked in 2013.


Brent crude has tumbled more than 70 per cent from its summer 2014 peak of more than $115 a barrel to just $30, amid a US supply glut, weaker Chinese demand and Opec’s decision not to cut output.

Oil and gas groups have responded by slashing capital expenditure in an effort to shore up cash flow and preserve dividend payouts to investors. Wood Mackenzie, the consultancy, calculates that nearly $400bn of spending on big, new projects has been put on hold.