* Shell cuts 2016 capex by 10 pct to $30 bln
* First quarter results beat analysts expectations
* Company warns of weaker second quarter earnings
* Operating expenses to fall to $40 bln this year (Updates throughout)
By Ron Bousso and Karolin Schaps
LONDON, May 4 (Reuters) - Royal Dutch Shell reducedits 2016 spending plans on Wednesday by another 10 percent fromthe target set in February when it completed the acquisition ofBG Group, and said it could cut further if needed.
In its first results since the deal that transformed it intothe world's top liquefied natural gas producer, Shell trimmedspending to $30 billion by cancelling projects such as the sourgas project in Abu Dhabi, and by slashing exploration costs.
Europe's largest oil company has been under pressure fromshareholders to cut annual spending below $30 billion to ensureit can maintain its dividend given the slow recovery in the oilprices.
"Can we go further? Yes, we can," Shell Chief FinancialOfficer Simon Henry, told reporters on Wednesday.
Having grappled with low oil prices for almost two years,capital spending, or capex, in the industry is set to fall for asecond consecutive year, something that has not happened formore than three decades. (GRAPHIC: http://tmsnrt.rs/1RG5hbI)
Last week, European rivals BP and Total lowered their projected 2016 capital spendingprogrammes.
Analysts welcomed Shell's spending cuts, though someinvestors are still hoping for deeper cuts when it announces itsstrategic outlook at a June 7 investor day.
Shell's shares were down 2.0 percent at 1131 GMT.
"With continued reduction of costs inside both companies in2016 and market balancing now firmly on the horizon, thecombined entity will be one of the key winners on the otherside," said Berstein analysts, who rate Shell "outperform".
COST CUTS
In a bid to slim down and raise cash, Shell is pressingahead with a $30 billion asset disposal programme by the end of2018, targeting first and foremost its downstream division.
It expects to make at least $3 billion from mainlydownstream disposals this year, Henry said, meaning Shell needsto step up asset sales in the coming years to meet its target.
Shell also said its annual operating expenses will fall to$40 billion this year, despite the BG acquisition, from $53billion in 2014.
"Essentially Shell has integrated BG with no increase to itsprior cost structure," said analysts at Jefferies, who advise tobuy Shell shares.
Shell, however, warned that low oil and gas prices,significant maintenance at production sites as well as"substantial redundancy and restructuring charges" will impactsecond-quarter earnings.
The oil producer plans to cut 10,300 jobs over the comingyears and has started redundancy discussions with staff inBritain, Australia and the Netherlands.
Shell's first earnings update with contributions from BGshowed overall oil and gas output rose 16 percent in the firstquarter from a year earlier. The addition of BG helped boost theamount of LNG sold by 25 percent to 12.29 million tonnes.
Shell said its definition of net income - current cost ofsupplies (CCS) earnings excluding identified items - totalled$1.55 billion in the first quarter, topping the $1.04 billionexpected by analysts.
A solid performance from its downstream division was themain reason for higher than expected earnings. It maintained itsdividend unchanged at 47 cents per share.
(Editing by David Clarke)
