Shell hit by $6.1b loss over falling global oil prices

Royal Dutch Shell yesterday revealed a loss of $6.1 billion during the third quarter of 2015 compared with a gain of $5.3 billion for the same quarter a year ago.

The company’s third quarter 2015 Current Cost of Supplies (CCS) earnings were $1.8 billion compared with $5.8 billion for the third quarter of 2014, representing a decrease of 70 per cent.

Shell said in its third quarter result released yesterday that upstream earnings were negatively impacted by lower oil and gas prices, partly offset by lower costs, increased production volumes and improved operational performance.

Besides, light, sweet crude for December delivery increased by 39 cents, or 0.9 per cent yesterday at $46.33 a barrel on the New York Mercantile Exchange while Brent, the global benchmark, lost 4 cents, or 0.1 per cent to $49.01 a barrel on ICE Futures Europe.

Crude price has been under pressure after two straight weeks of losses, on worries that the oversupply in oil products would swell from unseasonably warm weather and the waning maintenance cycle for U.S. refineries.

It added that earnings were also impacted by non-cash charges of some $1 billion related to adverse currency exchange rate effects on deferred tax positions and financing items which were not included as identified items.

It stated: “Compared with the third quarter 2014, CCS earnings excluding identified items included improved downstream and lower upstream results. In downstream, earnings benefited from steps taken by Shell to improve financial performance and from higher realised refining margins. CCS earnings excluding identified items were $1.8 billion compared with $5.8 billion for the third quarter of 2014, a decrease of 70 per cent. Earnings were impacted by non-cash charges of some $1.0 billion related to adverse currency exchange rate effects on deferred tax positions and financing items which were not included as identified items”.

Chief Executive of Shell, Ben van Beurden, said that the company’s integrated business and our performance drive are helping to mitigate the impact of low oil prices on the bottom line, in what is a difficult environment for the industry today.

He said: “We continue to improve the operational performance of our assets, and production volumes are up. Costs are falling across the company and Shell’s performance drive is delivering at the bottom line.

“Our financial framework is highly competitive, with balance sheet gearing at 12.7 per cent similar to year ago levels, despite a halving of oil prices. Both net investments and dividends have been covered by operating cash flow over the last year, when oil prices have averaged $60 per barrel”.