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Shell To Sell Another $5B In Assets, Misses Profit Expectations

Refining plant

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 was the third oil major in as many profit releases this earnings season so far that have missed analyst expectations, following Chevron and Exxon.

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.

Related: The Oil War Is Only Just Getting Started

Speaking to Bloomberg, the manager said that there is a US$5-billion divestment “almost announced”.

Just two days ago, Shell announced it had agreed to sell a package of UK North Sea assets to Chrysaor for a total of up to US$3.8 billion and a stake in a field offshore Thailand for US$900 million.

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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