Shell’s 4Q earnings dive 56%

Royal Dutch Shell, the Anglo/Dutch oil company, posted a drop in its fourth quarter 2015 earnings of 56 percent.

On a current cost of supplies (CCS) basis the 4Q earnings were $1.8 billion compared with $4.2 billion for the same quarter a year ago.

Full year 2015 CCS earnings were $3.8 billion compared with $19.0 billion in 2014, an 80% drop.

Shell said that in the Upstream section of its business, earnings were impacted by the significant decline in oil and gas prices, partly offset by lower costs. Fourth quarter 2015 CCS earnings excluding identified items benefited from continued strong Downstream results, Shell added.

Oil and gas production for the fourth quarter 2015 was 3,039 thousand boe/d, a decrease of 5% compared with the fourth quarter 2014.

Full year 2015 oil and gas production was 2,954 thousand boe/d, a decrease of 4% compared with 2014.

10.000 jobs cut. More to come?

In a prepared statement to go along with the results release Shell’s CEO Ben van Beurden did not dwell on the numbers, but switched to a more attractive subject, the multi-billion takeover of BG Group.

Van Beurden said: “The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns.

To remind, late in January, both sets of shareholders, Shell’s and BG’s respectively, approved what is said to be the largest energy sector deal of the decade.

Commenting further on Thursday, Shell’s CEO reiterated what he said recently – 10.000 staff will have to go – and he hinted this might not be the end of it.

He said: “We are making substantial changes in the company, reorganising our Upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices. As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies.”

Beurden also highlighted some other cost cutting measures undertaken in 2015, such as reducing the number of new investment decisions and designing lower-cost development solutions. Shell slashed its operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and expects further reductions in 2016, the CEO said.

“As a result of our actions in 2015, we have retained a strong balance sheet position, with 14% gearing. Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that. Shell’s dividends for 2015 were $1.88 per share, and are expected to be at least $1.88 per share in 2016, as previously announced,” Van Beurden concluded.

Offshore Energy Today Staff