Shell posts first loss in 10 years

AMSTERDAM – Royal Dutch Shell, Europe’s largest oil company, posted its first quarterly loss in 10 years on Thursday following a record plunge in oil prices, and warned that industry conditions ‘remain challenging’.

The fourth-quarter net loss was US$2,81 billion (N$27,8 billion), compared with a profit of US$8,47 billion a year earlier, Shell said. Revenue fell 24 per cent to US$81,07 billion.
Chief executive Jeroen van der Veer boosted the dividend by 11 per cent and said Shell would continue with ‘competitive and progressive’ payouts even as the global recession hurt demand. The company would maintain project investment between US$31 billion and US$32 billion this year after cutting spending plans last year.
‘We were slightly disappointed by the lower-than-expected exploration and production profitability,’ said Alexandre Weinberg, a Brussels-based analyst at Petercam. ‘This might lead us to foresee a lower free cash flow if hydrocarbon prices were to remain at their current levels.’
Excluding gains or losses from inventories and one-time items, earnings were US$3,89 billion. The median estimate of 12 analysts surveyed by Bloomberg was for profit of US$4.13 billion on this basis. Shell had a currency loss of US$351 million.
A record 56 per cent slump in US crude futures during the quarter eroded the value of inventories, and hit earnings from exploration and production, which dropped 24 per cent to US$3.71 billion. Oil prices fell to a four-year low of US$32.40 a barrel on the New York Mercantile Exchange on December 19, after peaking at US$147,27 on July 11.
Earnings at Shell’s refining division fell to US$582 million on a current cost of supplies basis, from US$876 million a year earlier and US$2,3 billion in the third quarter.
The oil major bought assets worth US$9 billion last year and disposed of US$7 billion, putting net capital investment at US$32 billion.
– Business Report