• 2 days Shell Oil Trading Head Steps Down After 29 Years
  • 2 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 2 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 2 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 2 days Venezuela Officially In Default
  • 2 days Iran Prepares To Export LNG To Boost Trade Relations
  • 2 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 3 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 3 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 3 days Rosneft Announces Completion Of World’s Longest Well
  • 3 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 3 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 3 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 3 days Santos Admits It Rejected $7.2B Takeover Bid
  • 4 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 4 days Africa’s Richest Woman Fired From Sonangol
  • 4 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 4 days Russian Hackers Target British Energy Industry
  • 4 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 4 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 4 days Lower Oil Prices Benefit European Refiners
  • 4 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 5 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 5 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 5 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 5 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 5 days OPEC To Recruit New Members To Fight Market Imbalance
  • 5 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 6 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 6 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 6 days GE Considers Selling Baker Hughes Assets
  • 6 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 6 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 6 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 6 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 6 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 9 days The Oil Rig Drilling 10 Miles Under The Sea
  • 9 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 9 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 9 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

GE Looks To Divest Energy Assets As Turmoil Continues

General Electric’s turmoil continues as…

Alt Text

Oil Survives Bearish Backlash

Crude benchmarks posted steep losses…

Alt Text

Are Oil Markets Immune To U.S. Shale?

Oil prices have maintained their…

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

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


Leave a comment

Leave a comment




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