• 4 minutes Tariffs to derail $83.7 Billion Chinese Investment in West Virginia
  • 9 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 17 minutes Kaplan Says Rising Oil Prices Won't Hurt US Economy
  • 19 hours Kaplan Says Rising Oil Prices Won't Hurt US Economy
  • 3 hours Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 4 hours Saudi Arabia turns to solar
  • 14 hours Could oil demand collapse rapidly? Yup, sure could.
  • 2 hours Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
  • 8 hours Corruption On The Top: Netanyahu's Wife Charged With Misuse of Public Funds for Meals
  • 14 hours Gazprom Exports to EU Hit Record
  • 3 hours Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 14 hours OPEC Meeting Could End Without Decision - Irony Note Added from OPEC Children's Book
  • 19 hours China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 10 hours U.S. Withdraws From U.N. Human Rights Council
  • 12 hours What If Canada Had Wind and Not Oilsands?
  • 13 hours "The Gasoline Car Is a Car With a Future"
  • 1 day EVs Could Help Coal Demand
  • 7 hours EU Confirms Trade Retaliation Measures vs. U.S. To Take Effect on June 22
  • 13 hours Sell out now or hold on?
Alt Text

U.S.-China Trade War Will Hurt Shale Drillers

The latest escalation in the…

Alt Text

Is Russia Bailing On The OPEC Deal?

Russia, the world’s largest oil…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Trending Discussions

Shell’s Profits Plunge 83%

Shell’s Profits Plunge 83%

More earnings reports are trickling in. Royal Dutch Shell is the last oil major to report first quarter earnings, and like its peers, the Anglo-Dutch company saw its profits tumble.

Shell’s current cost of supplies, likened to net profits, crashed by 83 percent from a year earlier, falling from $4.8 billion to just $0.8 billion. The results were the first since the company completed the $54 billion purchase of BG Group, and the combined company “is off to a strong start,” Shell’s CEO Ben van Beurden said. The good news for Shell is that the merger is moving quickly and the company is not seeing its cost structure rise. Related: Oil Prices Fall Back as Rally Hits a Ceiling

BG Group has also added quite a bit of production to the combined company’s output.

Still, Shell is still spending too much money. Shareholders are pressing the company to reduce spending to $30 billion so as to ensure the longevity of the company’s dividend payout. Shell outlined $3 billion in spending cuts to bring 2016 spending down to $30 billion. "Can we go further? Yes, we can," Shell’s CFO Simon Henry, said to reporters following the release. Shell also wants to sell off $30 billion in assets by the end of 2018. Related: Another Major Natural Gas Pipeline Project Bites The Dust

But as The Wall Street Journal noted, Shell is still not covering its high levels of capex and its dividend with cash flows. In the first quarter, Shell generated $4.6 billion in cash flow, but spent $6.1 billion on capex. And that does not take into account money going out the door in the form of dividends. Excluding proceeds from asset disposals, Shell needs oil prices to trade somewhere around $70 per barrel in order to cover capex.

The oil major is taking on more debt to cover the shortfall. Net debt to total capital increased to 26 percent following the BG purchase. Its debt levels will continue to climb until oil prices move much higher. Shell hopes its cash flow outlook will improve as the massive Gorgon LNG project in Australia comes back online and the mammoth Kashagan oil field in the Caspian Sea, in which Shell has a stake, finally begins operations.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News