Oil giants Royal Dutch Shell and Statoil reported steep declines in
earnings as lower crude prices continue to inflict pain on major oil companies.
Shell's fourth-quarter 2015 earnings, on a current cost of supplies (CCS)
basis, were $1.8 billion compared with $4.2 billion for the same quarter a year
ago, a decline of 56 percent.
The oil giant's exploration and production side recorded fourth-quarter
earnings "impacted by the significant decline in oil and gas prices,
partly offset by lower costs."
On an annual basis, Shell posted the lowest income in 13 years in 2015,
according to Reuters, with income falling 87 percent from the previous year to
$1.94 billion.
Shell's chief executive, Ben van Beurden, said the company expected to make
further reductions to capital spending in 2016 and staff reductions in both
Shell and BG Group, the natural gas company Shell is taking over following
shareholder approval last week.
"We are making substantial changes in the company, reorganizing our
Upstream (exploration and production), 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," he said in
an earnings statement.
The bad news was not confined to Shell alone. Earlier on Thursday,
Norwegian petroleum company Statoil also reported a cut in capital spending as
oil prices continue to drag on the major.
In the fourth quarter of 2015, Statoil posted adjusted earnings of 15.2
billion Norwegian crowns ($1.78 billion) but ahead of the 13.9 billion crowns
expected by analysts polled by Reuters. Still, adjusted earnings were down from
26.9 billion crowns in the same period the year before, marking a 44 percent
decline.
Although income was higher than expected, the group posted a net loss of
9.2 billion crowns in the fourth quarter, worse than the 8.9 billion crowns
loss seen in the same period the year earlier. Analysts polled by Reuters had
expected net profit of around 3.18 billion crowns.
The company said the loss was mainly as a result of lower short-term oil
price assumptions leading to impairment charges and provisions.
The oil company said it planned to make further cuts to capital spending in
2016, from $14.7 billion in 2015 to around $13 billion in 2016.
The earnings come amid tough times for oil majors although shares of both
Shell and Statoil were trading higher on Thursday, up 4.9 and 3.7 percent
respectively.
After a brief rally in the new year on hopes that major oil producing nations
could come to a deal to cut production, oil prices have fallen further.
However, prices experienced a rally Wednesday on a lower dollar and renewed
hopes of a production cut.
Eldar Sætre, the chief executive of Statoil, told CNBC on Thursday that no
part of the energy industry was immune to lower oil prices.
"Obviously, we are highly impacted by the oil price like the rest of
the oil and gas industry so you need to stay focused on what you can influence
and where you can make an impact and we are doing very good progress on
that," he said, noting that operational efficiency had improved.
He said Statoil was still preparing to invest despite the low price of oil.
"We are continuously looking at opportunities that might be out there and
you might have picked up that we acquired a share in Lundin (Petroleum) a few
weeks ago."
Sætre added that the near-term outlook for oil prices was not so gloomy.
"I do believe that we are heading towards a rebalancing of the oil market
gradully and we're getting into that situation in the next 12 months or
so," he said.
(
CNBC.com)