Shell misses profit expectations and announces a 3-year, $15-billion cut in spending.
LONDON, Jan 29 (Reuters) - Royal Dutch Shell blamed writedowns and forex losses for making almost no money in oil production, its most powerful division, in the last quarter of 2014, causing the company to miss profit forecasts by more than 20 percent.
Shell, the largest of the European energy majors, also announced a relatively modest three-year, $15 billion cut in spending to help it weather the plunge in oil prices.
"We are taking a prudent approach here and we must be careful not to over-react to the recent fall in oil prices," Chief Executive Ben van Beurden said.
The company also kept dividends unchanged to soothe investors but its shares fell four percent, hit by the earnings shortfall.
The company's fourth-quarter 2014 adjusted net income of $3.3 billion was weighed down by weaker than expected earnings from oil and gas production, known as upstream.
"Upstream earnings of $1.7 billion were well below our and consensus expectations of $2.8 billion," Morgan Stanley analysts said in a note.
"Integrated gas accounted for $1.6 billion of this profits, implying that Shell's remaining upstream activities were generating almost no earnings with Brent still averaging $75 per barrel in the fourth quarter."
Chief Financial Officer Simon Henry blamed the miss on a number of one-off items, including forex losses, exploration write-offs in North America and increased estimates of future decommissioning liabilities worldwide. He said those one-offs were unlikely to be repeated in future quarters.
View Full Article
Copyright 2017 Thomson Reuters. Click for Restrictions.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you