BG’s average realised gas price fell 34 percent in the third quarter and oil prices were down 48 percent year on year. The Anglo-Dutch company announced charges of $7.9 billion.
Advertisement
Upstream earnings included a net charge of $8.21 billion, mainly related to “management decisions to halt longer-term projects and a downward revision to the oil and gas price outlook”.
With the exclusion of one-time charges and variations in the value of inventory, the company stated a $4 billion drop in profit. A year earlier the company had reported $5.8 billion which had fallen to $1.8 billion; on an adjusted basis, which reflects the turmoil that the oil and gas industry has been through.
While low oil prices make it more challenging for the company to continue to pour billions into new projects, Van Beurden said the company does not use current oil and gas prices as a management tool but bases its decision on long-term fundamentals, and for LNG, it is still a profitable business.
A cost and efficiency program implemented by the company is “progressing well”, according to BG, and remains on track to deliver “at least” $300 million target savings for 2015. Oil is not the only fossil fuel that has been affected; in the wake of the oil price slump, prices of commodities began to fall one by one as well.
Importantly, the company upgraded its full-year production guidance to between 680,000 and 700,000 barrels of oil equivalent per day after third quarter production rose 26% year-on-year to 716,000 barrels of oil equivalent per day.
Shell’s Arctic drilling project had encountered problem after problem since it commenced.
In a letter to Cheryl Oates, Premier Rachel Notley’s press secretary, Shell spokeswoman Tara Lemay says the timing of the announcement was “due to the market disclosure of an impairment” in advance of the company’s quarterly results.
At the same time, environmental activists had the company in its sights, pledging to thwart the company in the arena of public opinion. They insisted that the icy Arctic waters could not be cleaned in the event of a spill.
Advertisement
Royal Dutch Shell says its announcement scrapping the Carmon Creek oilsands project in northwestern Alberta was not deliberately timed to coincide with this week’s Alberta budget.
