Shell Cuts $15 Billion of Spending as Profit Misses Expectations
(Bloomberg) — Royal Dutch Shell Plc will cut $15 billion of investment over the next three years as the crash in oil prices saw fourth-quarter profit miss forecasts.
Shell, the first of the world’s largest oil companies to report earnings following the slump in crude to a five-year low, will review spending on about 40 projects worldwide, Chief Executive Officer Ben van Beurden said today in an interview.
“We see pressure on our investment program,” van Beurden said on Bloomberg TV. “It’s a game of being prudent but at the same time not overreacting.”
Profit excluding one-time items and inventory changes was $3.3 billion in the quarter, up from $2.9 billion a year earlier, Shell said today. That missed the $4.1 billion average of 13 analyst estimates compiled by Bloomberg.
Shell shares dropped as much as 4.4 percent in London and traded at 2,067 pence at 10:17 a.m.
The global industry is scurrying to respond as oil below $50 a barrel guts cash flows. Statoil ASA, Tullow Oil Plc and Premier Oil Plc have delayed projects or cut exploration spending. BP Plc has frozen wages and Chevron Corp. delayed its 2015 drilling budget. By cutting spending, companies aim to protect returns to investors.
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