Shell share price drops as profits to slide 40%

Mr Van Beurden said: “Bold, strategic moves shape our industry”.

Despite the hit to earnings a year ago, van Beurden said he was “pleased with Shell’s operating performance in 2015, and the momentum in the company to reduce costs and to improve competitiveness”. It said the takeover will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies, as the streamlining and integration process of the two companies continues.

Ben van Beurden, chief executive of Royal Dutch Shell, said the deal with BG Group will mark the start of a “new chapter in Shell, to rejuvenate the company”. That compares with the $1.8 billion average estimate of nine analysts surveyed by Bloomberg, and profit of $3.3 billion a year earlier. Its capital investment budget combined with BG Group’s will come in at $33 billion this year, about 45 percent lower than its peak in 2013.

Elsewhere, pub group JD Wetherspoon fell more than 6% or 44.5p to 630p after it warned on profits.

Shell is scheduled to report its complete fourth quarter and full year results February 4.

Reporting preliminary fourth-quarter earnings on Wednesday, Shell said it cut $4 billion in operating costs last year and expects to shake out another $3 billion in costs this year.

Many of Shell and BG’s large shareholders have voiced support for the deal but a slump in oil prices below $30 a barrel has raised concern Shell may be overpaying for the smaller rival.

For the final three months of 2015, it expects profits of $1.6bn to $1.9bn.

Identified items for the fourth quarter 2015 are expected to be around a net charge of US$200mln to an immaterial gain, mainly reflecting gains on sale of assets and impairments and for the full year 2015 are expected to be a net charge of some US$6.8bn-US$7bn.

“Although we do not formally forecast Opec oil production, in a scenario whereby Iran adds 600,000 barrels per day (bpd) to the market by mid-year and other members maintain current output, global oil supply could exceed demand by 1.5 million bpd in the first half of 2016”, the IEA said in its latest review of the health of the energy market.

Its exploration and production business did well and LNG shipping & marketing delivered 282 cargoes, up 58% on 2014, in hard markets.