Shell reports 44 percent drop in 4th quarter earnings

The Dutch company made £1.23bn f or the fourth quarter of previous year compared with a £2.8bn profit for the same period in 2014.

Profit adjusted for one-time items and inventory changes shrank 44 per cent to US$1.8 billion (S$2.5 billion), near the midpoint of the preliminary US$1.6 billion-to-US$1.9 billion range it gave last month, Shell said Thursday.

Shell, whose shareholders last week approved its takeover of rival BG Group (BG.L), said 2015 income fell 87 percent to $1.94 billion, in line with analysts’ estimates, the lowest since at least 2002 as its oil and gas production unit took a big hit.

“The magnitude of the oil price drop-52 percent on average in 2015-will not be matched by most oil majors’ cost and capex adjustments over the year”, S&P said.

The company’s results come two days after BP reported a $6.5 billion loss for 2015 and announced a further 3000 jobs would be cut worldwide, at its “downstream” refinery.

Van Beurden repeated earlier statements that 10,000 full-time and contractor positions would be eliminated from the two companies as a result of that merger.

The company said exploration and production was up 20% in the fourth quarter to 757 thousand barrels of oil equivalent per day (kboed) compared to the same quarter in 2014. In Upstream, earnings were impacted by the significant decline in oil and gas prices, partly offset by lower costs.

Shell owns a 50 per cent stake in the project, which is being developed with partners Korea Gas Corp., Mitsubishi Corp., and PetroChina Co. Ltd.

The big supply-driven drop in oil prices is facing further headwinds from the slowdown in economic growth in Europe and China.

Shell became the latest victim of the crashing oil price today, reporting an 80% slump in profits to a 13-year low.

Both maintained their dividend payout to shareholders.

Royal Dutch Shell Chief Executive Officer Ben van Beurden was upbeat, and heralded the completion of the BG Group takeover as a reason for optimism.

Beurden did not rule out the prospect of further job cuts, adding that everything will depend on how crude oil prices react going forward.

This contrasts with the mining sector, where giants including Glencore, Anglo American and Vale have all suspended dividend payments as they look to preserve cash and shore up creaking balance sheets.