Royal Dutch Shell said fourth-quarter earnings tumbled 44 percent as the collapse in oil prices took its toll on another European oil company.
Profit adjusted for changes in the value of inventories and one-time items dropped to $1.83 billion from $3.26 billion in the same period a year earlier, the Anglo-Dutch energy giant said Thursday.
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The results came days after Shell sealed a 47-billion-pound takeover of BG Group Plc, which will increase the company's proven reserves of oil and natural gas by 25 percent. While critics questioned the deal because of the plummeting price of oil, CEO Ben Van Beurden compared it to the bold moves that have defined the industry and promised it would rejuvenate Shell.
The BG deal comes as Shell and other oil companies are slashing jobs and postponing investments to adjust the bottom line to the dramatic circumstances.
Jobs will also be eliminated in the Shell-BG deal. In a trading statement unveiled just before shareholders voted on the BG merger, Shell said last month that streamlining and integration from the deal would include the loss of 10,000 staff and contractor positions across both companies in 2015-2016.
"In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions," Van Beurden said. "Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that."
Cheap oil hurting
Oil prices have been plunging. Brent crude, the benchmark for international oil, fell 34 percent last year and hit a 12-year low of $27.10 a barrel in January. It traded at $33.54 on Wednesday, having been above $100 a barrel as recently as September 2014.
The company cut capital investment by $8.4 billion to $28.9 billion and slashed operating costs by 4.1 billion to $41.1 billion for 2015. The company expects another $3 billion in cuts this year.
Net income improved, rising 58 percent $939 million
The report comes amid sweeping changes for the company. Shell has exited from exploring in Alaska for the foreseeable future and cancelled the Carmon Creek heavy oil project.
Oil supplies are high even though consumption growth has tailed off, particularly in China. OPEC members, meanwhile, haven't wanted to cut production - even at a time Iran wants to turn on the taps after decades of sanctions.
Campaign groups like Greenpeace suggest that it's time that the oil giants changed and relied on other forms of energy for their profits, citing more electric cars, solar panels, and better-insulated homes.
"Shell and BP have bet heavily on the wrong energy sources, and now they're losing big," Greenpeace UK's senior climate adviser Charlie Kronick said. "The problem is that with thousands of jobs, billions in investments and people's pensions tied up with their companies' fortunes, Big Oil's bosses won't be the only ones to pay for their shortsightedness."