Royal Dutch Shell Plc  .com Rotating Header Image

Royal Dutch Shell Profits Continue to Fall, Prompting 6,500 Layoffs By

Screen Shot 2015-05-11 at 12.10.09

Screen Shot 2015-07-30 at 14.27.02

Screen Shot 2015-05-11 at 21.10.55

By STANLEY REED: JULY 30, 2015

LONDON — Royal Dutch Shell said on Thursday that its profit fell sharply in the second quarter as a strong performance in marketing and refining failed to offset the brunt of lower oil and gas prices.

The oil giant also said it would cut its capital investment and eliminate 6,500 jobs as the drop in oil and gas prices squeezes its vast global exploration and production operations.

The company, based in The Hague, said earnings adjusted for inventory changes and excluding one-time items were $3.8 billion, compared with $6.1 billion in the same period in 2014.

The company earned just $1 billion in the quarter from oil and gas exploration and production, compared with $4.7 billion a year earlier. Its average revenues from a barrel of oil were 48 percent lower for the quarter than a year earlier, while those from natural gas, an important earner for Shell, fell by 31 percent.

Shell executives indicated that they were hunkering down for what could be a long period of low oil prices.

The company also appeared to try to allay fears among some investors that the $70 billion acquisition of BG Group, the British oil and gas producer, could prove ill-timed. In April, Shell agreed to buy BG, which was once part of British Gas and is a major player in liquefied natural gas.

“We will reshape the company once this transaction is complete,” Ben van Beurden, Shell’s chief executive, said in a statement.

He indicated that the BG acquisition, which brings promising development prospects in Brazil and elsewhere, would allow Shell to cut exploration spending and would lead to wide-ranging asset sales of $30 billion between 2016 and 2018.

Shell said it had already established a team with BG to plan the integration of the two companies once the deal closes in early 2016.

As part of its cost cutting, Shell said it anticipated 6,500 staff and contractor reductions this year. Capital investment in 2015 will be $30 billion, $7 billion lower than last year, the company said.

Biraj Borkhataria, an analyst at RBC Capital Markets in London, said Shell’s comments would most likely be “taken positively” by investors, who have been uneasy about the BG transaction as well as Shell’s efforts to drill in waters off Alaska.

Shell has invested more than $7 billion over the last seven years to explore for oil in the Alaskan Arctic when most other companies have given up or at least suspended their operations in the region. With oil prices plummeting to about $54 a barrel from nearly $110 last summer, Shell’s effort in Alaska has appeared all the more risky in terms of costs.

But after years of frustrating accidents and regulatory delays, the company has two floating rigs in the Chukchi Sea ready to explore what Shell geologists say they believe is a major new oil field with the potential to catapult company reserves.

Environmentalists have dogged Shell’s latest efforts, with kayakers in the port of Seattle trying to block drilling ships. This week, a few dozen protesters rappelled off a bridge to block an icebreaking vessel trying to leave Portland, Ore., after repairs.

Once the icebreaker reaches the Chukchi Sea sometime in mid-August, Shell will seek final permission from federal regulators to drill in oil-bearing zones. But even if drilling is approved, there may only be enough time to drill one well before the sea freezes, and that may be insufficient to go ahead with full production.

Clifford Krauss contributed reporting from Houston.

SOURCE

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

0 Comments on “Royal Dutch Shell Profits Continue to Fall, Prompting 6,500 Layoffs By”

Leave a Comment

%d bloggers like this: