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Shell continues to suffer from low oil prices

Xinhua, May 4, 2016 Adjust font size:

Shell posted an income and earnings decrease of billions in the first quarter of 2016, mainly due to lower oil prices, the Anglo-Dutch oil and gas company announced on Thursday.

The income attributable to shareholders dropped to 421 million euros (484.07 million U.S. dollars) in the first quarter of 2016, compared to 3.854 billion euros in the same quarter one year ago, a decline of 89 percent. According to Shell this decline was impacted by the decrease in oil, gas and LNG prices and weaker refining industry conditions.

The earnings on a current cost of supplies basis (CCS), excluding identified items, dropped by 58 percent from 3.252 billion euros in the first quarter of 2015 to 1.351 billion euros in Q1 of 2016, of which a loss of 1.250 billion euros in the Upstream department.

"Shell's integrated activities differentiate us, with our Downstream and Integrated Gas businesses delivering strong results and underpinning our financial performance despite continued low oil and gas prices," CEO Ben van Beurden reacted in a press release.

"We continue to reduce our spending levels, to capture cost opportunities and manage the financial framework in today's lower oil price environment," Van Beurden added.

On Feb. 15, 2016, Shell completed the acquisition of the British oil and gas company BG Group. "The combination with BG is off to a strong start, as a result of detailed forward planning before the completion of the transaction," Van Beurden said. "This will likely result in accelerated delivery of the synergies from the acquisition, and at a lower cost than we originally set out."

"In practice, we expect to absorb BG's capital investment and operating expenses during 2016, with no net increase overall, compared with Shell stand alone in 2015," the CEO continued. "The completion of the BG deal has reinforced our strategy and strength against the backdrop of hugely challenging times for our industry. For Shell and our shareholders, this is a unique opportunity to reshape and simplify the company." Enditem