By EDUARD GISMATULLIN
Royal Dutch Shell CEO Ben van Beurden promised to slash
capital spending and accelerate asset sales to revive earnings
at Europes largest oil
Shell, which made its first profit warning in a decade this
month, dropped targets for cash flow, postponed plans to drill
in Alaska and pledged to restructure its shale operations in
North America, it said Thursday in a statement. The Hague-based
company also raised its dividend.
We have lost some momentum in operational delivery,
and we can sharpen up in a number of areas, van Beurden
said in the statement. 2014 will be a year where we are
changing emphasis, to improve our returns and cash flow
Van Beurden, who took over from Peter Voser at the start of
the year, is trying to win investor confidence after the
companys fourth-quarter profit fell to the lowest since
2009. Unprofitable shale investments in North America, weak
margins from oil refining worldwide and dud
exploration wells all cut earnings as the rising cost of
developing fields saw net capital spending reach a record $44
billion last year.
The focus has to be on capital efficiency, capital
discipline -- hopefully they can deliver it, said Jason
Kenney, an analyst at Banco Santander in Edinburgh.
Shells loss-making Americas and oil product
divisions with a combined about $80 billion capital employed,
really do need attention.
The combination of rising costs and stagnant oil prices has
curbed profits throughout the oil industry. ConocoPhillips,
Chevron and BG Group have all warned investors fourth- quarter
profits will be lower than expected.
ExxonMobil, the biggest US oil company, will report results
later Thursday along with Conoco and Occidental Petroleum.
Shell had planned to invest $130 billion and generate $200
billion in cash flow in the period 2012 to 2015. It will reduce
spending including acquisitions to $37 billion this year, down
from $46 billion in 2013, the company said.
Restructuring and improving profitability in North
America resource plays and oil products worldwide,
is a particular focus for the company, Shell said in the
The Anglo-Dutch company on Thursday said profit excluding
one- time items and inventory changes plunged 48% from a year
earlier to $2.9 billion in the fourth quarter on exploration
expenses and lower production. That matched the drop Shell
forecast on Jan. 17 also because of losses in the Americas,
lower refining margins and production
disruptions in Nigeria and elsewhere.
Oil and gas production fell about 5% to 3.25 million bpd, it
said. Shell also took a $631 million exploration charge in the
Shell will increase first quarter dividend payout by 4% to
The company has agreed to sell holdings valued at about $2.1
billion in Australia and Brazil. It is seeking buyers for
interests in oil and gas fields, in pipeline, fuel-refining and
marketing assets from the US to Nigeria. It may also exit its
investment in Woodside Petroleum worth about $6.3 billion.
Shell has received indications of interest to acquire
its refining and parts of its marketing
portfolio in Australia, it said. The company is
also considering the sale of certain of its marketing assets in
Norway and Italy.
It sold about $300 million in assets including liquids-rich
shales holding in Ohio in the fourth quarter. Shell secured new
exploration acreage in Greenland and Tunisia in the period.