Shell vows more cuts as annual profit sinks on weak oil prices

Royal Dutch Shell (RDSa.L), Europe’s largest oil company, reported its lowest annual income in at least 13 years on Thursday, vowing to take further steps to weather the worst downturn in over a decade.

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.

“Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that,” Chief Executive Ben van Beurden said in a statement.

Shell’s earnings are the latest demonstration of how badly oil producers are suffering from weak oil prices. 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.

Shell has scrapped multi-billion projects over the past year to weather the downturn, including its controversial exploration programme in the Alaskan Arctic Sea, the Bab sour gas field in Abu Dhabi and the Carmon Creek oil sands project in Canada.

Norway’s Statoil said on Thursday it would cut 2016 capital expenditure (capex) by $1.7 billion year on year.

Shell’s 2015 capex came in at $28.9 billion, down $8.4 billion from a year earlier. For 2016, capex is expected to reach $33 billion for Shell-BG combined.

Shell’s fourth-quarter current cost of supplies (CCS)earnings excluding identified items, its preferred way of measuring profits, fell 44 percent to $1.83 billion.

Shell sold $5.5 billion worth of assets in 2015, it said.

Source: Reuters