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Royal Dutch Shell (NYSE:RDS.A) is making “significant progress” on selling another US$5 billion worth of assets, chief financial officer Simon Henry said on Thursday after the oil supermajor reported 2016 profits below analyst expectations.
Shell’s current cost of supplies (CCS) – a key measure comparable with net income – came in at US$1.8 billion, excluding identified items, compared with US$1.6 billion for the fourth quarter 2015, the company said today. Full-year 2016 CCS earnings attributable to shareholders excluding identified items dropped to US$7.2 billion from US$11.4 billion in 2015.
The fourth-quarter profit fell short of analyst estimates by around US$1 billion, according to Bloomberg.
Shell, however, had two brighter points in its earnings report: lowered debt and increased cash flow. The company cut its net debt to US$73.346 billion at end-December from US$77.845 billion as of end-September 2016. Gearing – net debt as percentage of total capital – also dropped, to 28 percent from 29.2 percent at end-September 2016.
“Debt has been reduced and, for the second consecutive quarter, free cash flow more than covered our cash dividend,” CEO Ben van Beurden said in the company statement.
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Speaking to Bloomberg, the manager said that there is a US$5-billion divestment “almost announced”.
In Shell’s earnings release, van Beurden said:
“We are gaining momentum on divestments, with some $15 billion completed in 2016, announced, or in progress, and we are on track to complete our overall $30 billion divestment program as planned.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.