LONDON (Alliance News) - Royal Dutch Shell PLC Thursday said it swung to a loss in the third quarter after booking substantial losses on exceptional items and experienced a fall in revenue.
The FTSE 100-listed oil and gas giant reported a USD6.10 billion current cost of supply loss in the third quarter of 2015, swinging from a USD5.30 billion profit a year earlier. That loss was caused by exceptional items totalling USD7.90 billion.
Excluding those items, current cost of supply earnings came in at USD1.80 billion, still significantly down from the USD5.80 billion reported a year ago. As expected, Shell's downstream results improved whilst upstream earnings were severely hampered by lower oil prices.
In downstream, earnings benefited from steps taken by Shell to improve its financial performance and from higher realised refining margins. Upstream earnings were negatively impacted by lower oil and gas prices, partly offset by lower costs, increased production volumes and improved operational performance.
Total revenue in the quarter came in at USD68.70 billion, down from USD107.85 billion a year ago and down from USD72.40 billion in the previous quarter.
Cashflow from operating activities in the quarter was USD11.20 billion, slightly down from USD12.80 billion a year earlier.
The company announced a third quarter dividend of USD0.47 per share.
The oil company has pulled out of a number of projects recently in attempts to curtail expenditure and focus on more economically viable projects. Shell first pulled out of its controversial drilling campaign in Alaska for the "foreseeable future" because it did not find enough oil at the Burger J exploration well.
On Wednesday, the company exited its 80,000 barrel per day Carmon Creek thermal in situ project located in Alberta, Canada, as it did not rank highly enough within its portfolio.
The company booked a USD4.10 billion write-down against its failed arctic drilling campaign and a USD2.00 billion impairment against the Carmon Creek project. They are both included in the exceptional items reported Thursday.
Within the third quarter, Shell also cut 1,300 jobs from its 6,500 strong Malaysian workforce.
Divestments continue, with Shell selling sold Smart Fuel AS, its retail, commercial fuels and supply and distribution logistics businesses in Norway, to St1 Nordic Oy, but it said the Shell brand will continue through a retail brand licence agreement. There also have been media reports that it is looking to sell its stake in the Gannet field and Triton field, both in the UK North Sea.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
