Upstream charges drag Shell 3Q down

Royal Dutch Shell has reported a loss of $6.1 billion on a current cost of supplies (CCS) for the third quarter of 2015, compared with a gain of $5.3 billion for the same quarter a year ago. Revenue fell to $68.7 billion, from $107.8 billion a year ago.

The company took a $7.9 billion net charge, stemming from write-downs of upstream projects in Alaska and Canada, and a downward revision to the oil and gas price outlook.

Charges for Alaska, where Shell abandoned its offshore drilling program, citing disappointing well results and uncertain regulatory environment, were $2.6 billion. The company also abandoned the Carmon Creek project in Canada, taking a $2 billion charge.

The net charge also reflected impairment charges of $3.7 billion, triggered by the downward revision of the long-term oil and gas price outlook.

Excluding the charges, the Hague-based oil giant reported a profit of $1.8 billion, versus $5.8 billion in 2015.

Shell CEO Ben van Beurden said: “While our cash flow and our operating performance in the quarter were strong, the headline numbers we’re reporting today include substantial charges. These charges reflect both a lower oil and gas price outlook and the firm steps we are taking to review and reduce Shell’s longer-term option set.”

“We have halted exploration activities offshore Alaska, and stopped the construction of the Carmon Creek in-situ oil project in Canada. These are difficult, but impactful decisions. I am determined that Shell will become a more focused and competitive company as a result.”

Van Beurden added that the $70 billion acquisition of BG Group, which remains on track for completion in early 2016, was „a springboard to focus Shell into fewer and more profitable themes, especially deep water and integrated gas.”

Offshore Energy Today Staff

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