Shell’s Q4 2015 earnings fell 57% along with its full year earnings taking a major plunge of 80%, as the Anglo-Dutch supermajor confirms the reduction of some 10,000 across both Shell and BG Group, once the mega merger is complete in a few weeks.
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Shell, BG to lay off about 10,000 staff and direct contractor positions. Image of Shell CEO Ben van Beurden, courtesy of Shell. |
“The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns,” Royal Dutch Shell CEO Ben van Beurden said. “We are making substantial changes in the company, reorganising our upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices. As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies.”
Shell’s Q4 earnings came in at US$1.8 billion, compared to the $4.2 billion the company reported in the same period last year, representing a 57% decline. For full year 2015, earnings were $3.8 billion, a substantial loss of 80% compared to 2014’s $19 billion.
The company reported full year income at $1.94 billion, an 87% fall from 2014’s $14.9 billion. However, for Q4 2015, Shell saw a 58% jump in income, going to $939 million from $595 million in Q4 2014.
“Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016,” van Beurden said.
Oil and gas production for Q4 2015 was 3 MMboe/d, a decrease of 5% compared with Q4 2014. Full year 2015 oil and gas production was nearly 3 MMboe/d, a decrease of 4% compared with 2014.
However, Shell said that production for Q4 2015 was in line with the same period last year. Full year 2015 production volumes increased by 1% compared with 2014.
The company’s upstream earnings included a net charge of $826 million, primarily reflecting asset impairments of some $640 million and a net charge on fair value accounting of certain commodity derivatives and gas contracts of some $210 million, partly offset by gains on divestments of some $100 million, Shell said.
In upstream, Shell announced first production from its operated Corrib gas field, off the northwest coast of Ireland. At peak annual production, Corrib is expected to produce 45,000 boe/d.
Shell also started up the gas injection facilities at its operated Gumusut-Kakap deepwater development in Malaysia. First oil production was achieved in Q4 2014.
Offshore Nigeria, Shell Nigeria E&P Co. announced first production from the Bonga Phase 3 project, which is an expansion of the Bonga Main development. Peak production at the project is expected to be some 50,000 boe/d. The oil will be transported through existing pipelines to the Bonga floating production, storage and offloading facility.
Operating costs for the full year 2015 decreased by $4.1 billion, to $41.1 billion, and Shell’s costs are expected to fall again in 2016, by a further $3 billion. This is some 15% lower than 2014 levels. Synergies from the BG combination will be in addition to that, Shell said.
The long-awaited mega merger between Shell and BG is expected to be complete come 15 February, which is subject to the satisfaction or waiver of certain customary conditions, including the sanction of the scheme arrangement to implement the combination by the High Court of Justice. Both Shell and BG shareholders were widely in a favor of the merger.
Under certain circumstances occurring on or prior to 31 July 2016, Shell has agreed to pay BG Group $1.1 billion (£750 million) by way of compensation for any loss suffered by BG in connection with the preparation and negotiation of the transaction, Shell said.
Read more:
Shell, BG merger gets final approval
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