Shell reports massive drop in Q2 earnings
Global energy giant Royal Dutch Shell has reported a massive net earning loss for the second quarter of 2016 in what appears to be a result of low oil prices, weak refining margins and production outages.
The Anglo-Dutch oil major says its net earnings in the three months to June sank 72 percent to $1.05 billion – a figure that news agencies say is much higher than what the analysts expected, AP reported. The company’s profit for the same period last year stood at $3.76 billion.
Shares in the company fell more than three percent Thursday morning after the announcement.
Nevertheless, the company has announced in a statement that it is "firmly on track" to deliver $40 billion in cost savings by the end of the year.
"Lower oil prices continue to be a significant challenge across the business, particularly in the upstream (business)," news agencies have quoted Shell Chief Executive Ben van Beurden as saying.
"We are making significant and lasting changes to Shell's working practices and cost structure."
The results came after Shell completed a $54 billion takeover of BG Group Plc earlier this year. The deal is expected to increase the company's proven reserves of oil and natural gas by 25 percent.
While critics questioned the deal following the drop in oil prices, Shell said it would provide opportunities to cut costs by eliminating duplication, AP added in its report.
This appears to have already provoked protests by the company’s staff.
Earlier this week, North Sea oil workers employed by Wood Group on Shell platforms launched a 24-hour strike over cuts in pay and allowances; the first such strike in decades. Some 400 workers were involved in the action, AP added.
Shell could face even more protests as it has announced that it will trim at least 2,200 jobs globally to adjust to the more challenging times.
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