Source BLOOMBERG
Royal Dutch Shell Plc, which is on the brink of completing the oil
industry’s largest deal in a decade, said fourth-quarter profit fell 44
percent after the rout in crude prices deepened.
Profit adjusted
for one-time items and inventory changes shrank to $1.8 billion, near
the midpoint of the preliminary $1.6 billion-to-$1.9 billion range it
gave last month, Shell said in a statement Thursday. That matches the
$1.8 billion average estimate of 14 analysts surveyed by Bloomberg, and
compares with profit of $3.3 billion a year earlier.
Crude’s
collapse has slashed earnings for oil companies from Exxon Mobil Corp.
to BP Plc, leaving them struggling to strike a balance between investing
for growth and making shareholder payouts. Shell is betting its $50
billion acquisition of BG Group Plc will help it maintain dividends and
increase oil and gas production at a time when cash flow is shrinking.
Shell’s shareholders last month approved
the company’s plan to buy BG, which has oil fields in Brazil and
natural-gas assets from Australia to Kazakhstan, despite the 40 percent
tumble in crude prices since the deal was announced. The average price
of benchmark Brent crude in the fourth quarter was $44.69 a barrel, the
lowest since 2004. Average prices have lost more than $10 this quarter,
making it harder for Shell to deliver on its promises to investors.
The
company’s B shares, the class of stock used in the deal with BG, have
dropped 6.8 percent this year. The eight-member FTSE 350 Oil & Gas
Producers Index has declined 4.7 percent.
The acquisition of BG is due to become effective on Feb. 15.
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