Shell battered by falling oil price as profits halve

Full-year earnings fell the most in 13 years from $19 billion to $3.8 billion.

Shell’s £35bn takeover of BG Group was given the final green light on Friday when 99.5% of BG shareholders voted in favour of the deal, a sign of how much Shell overpaid.

Royal Dutch Shell plc is an independent gas and oil company.

The world’s largest oil company, ExxonMobil (XOM.N), this week reported its smallest quarterly profit in more than a decade, while BP’s 2015 loss was its biggest ever.

Profit adjusted for one-time items and inventory changes shrank to $1.8 billion, near the midpoint of the preliminary $1.6 billion-to-$1.9 billion range it gave last month, Shell said in a statement Thursday.

This morning, the oil major was the latest to announce the full impact of the sharp fall in oil prices on its business in 2015.

Lower oil prices have forced oil-producing companies to reduce their costs in order to survive under the current market conditions.

Shell’s chief executive, Ben van Beurden, said the company expected to make further reductions to capital spending in 2016 and staff reductions in both Shell and BG Group, the natural gas company Shell is taking over following shareholder approval last week.

Oil producers lost more than $1.7 trillion in market value since crude prices began to slide. Benchmark crude oil prices were down sharply a year ago due to rising supplies coupled with slower demand growth. But Shell look to be doing everything they can to protect the dividend and as they say, eventually they should have rising cash flow from BG’s assets to help further. Royal Dutch Shell announced the $70 billion deal to acquire BG Group back in April 2015 and has been busy the last few months obtaining the required merger related approvals from various regulatory authorities.

Upstream earnings also are expected to be impacted by, some 20 thousand boe/d related to a malaysia psc expiry, and some 15 thousand boe/d as a result of divestments.

The most recent worry for investors is the lifting of Western sanctions on Iran which could worsen the existing oversupply problem, with the country’s deputy oil minister, Roknoddin Javadi, predicting it can produce an extra 500,000 barrels per day.

Mr van Beurden said Shell would continue to manage costs amid falling prices for oil. Downstream segment is engaged in manufacturing, distribution and marketing activities for oil products and chemicals, alternative energy (excluding wind), and carbon dioxide (CO2) management.