4th May 2016 06:19
LONDON (Alliance News) - Royal Dutch Shell PLC Wednesday said earnings plummeted in the first quarter of 2016 as the oil giant said its expenditure this year is likely to be considerably lower than previously guided.
Shell said its current cost of supply earnings dropped to USD814.0 million in the first quarter of 2016 from the USD4.80 billion reported a year earlier. Before exceptional items, CSS earnings halved to USD1.60 billion from USD3.70 billion.
Shell said its earnings were hit by continuing declines in oil, gas and liquefied natural gas prices, alongside weaker conditions within the refinery industry. On the other hand, earnings benefited from lower operating expenses, as steps taken by Shell to reduce costs more than offset the increase in operating expenses associated with the acquisition of BG Group, Shell said.
The first quarter results were the first set of financial results to have incorporated BG Group following the acquisition completed in February.
Compared to the fourth quarter of 2015, CSS earnings fell from USD1.84 billion but rose slightly from USD1.57 billion once exceptional items are excluded.
Cashflow from operating activities came in at USD661.0 million, which included negative capital movements of USD3.90 billion, compared to cashflow of USD7.10 billion a year earlier. In the fourth quarter of 2015, cashflow amounted to USD6.42 billion.
Gearing at the end of the quarter stood at 26.1% compared to only 12.4% at the end of March 2015.
"Putting all of this together, capital investment in 2016 is clearly trending toward USD30 billion, compared to previous guidance of USD33 billion, and some 36% lower than combined Shell and BG investment in 2014," said Shell.
"Annual operating expenses excluding identified items are trending towards a run rate of USD40 billion compared with 2014 combined spend of around USD53 billion," Shell added.
By Joshua Warner; [email protected]; @JoshAlliance
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