Royal Dutch Shell net profit slides 32pc

LONDON Royal Dutch Shell on Thursday said its net profit slid by almost one third last year hit by lower oil prices

LONDON Royal Dutch Shell on Thursday said its net profit slid by almost one third last year hit by lower oil prices

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the US print edition of The Wall Street Journal (January 31, 2020).

Shell warned it would slow the pace of share buybacks as depressed oil prices hammered its profits previous year.

The Chief Executive Officer, Ben van Beurden, said the company faced "challenging macroeconomic conditions" in its petroleum refining and chemicals business, "as well as lower oil and gas prices" past year.

The company cited lower realised oil, gas and LNG prices, weaker realised refining and chemicals margins as well as negative movements in deferred tax positions for the fall.

US energy giants Exxon Mobil Corp. and Chevron Corp. are set to report results on Friday.

Richard Hunter, head of markets at Interactive Investor, said: "Shell foresaw a hard period of trading in 2019 when it issued a profit warning in December and this has indeed come to pass". The energy company reported $1.18 earnings per share for the quarter, topping the consensus estimate of $0.98 by $0.20.

The company's so-called reserve life last increased in 2013 to just below 12 years but it has been on a downward trend ever since and hit 7.9 years in 2019.

Coronavirus 'domestic outbreak' warning as China slams USA travel ban
All but one of the new deaths came in hardest-hit Hubei province, the epicentre of an outbreak that has spread around the world. The WHO estimates the virus has been detected in at least 23 other countries, the majority involving those who visited China .

"The weakness in oil and gas prices is, of course, a major contributor to the weakness, while the general macro environment remains a serious challenge". "This places a strong emphasis on their oil and gas business which is critical to funding its transformation". The company had revenue of $89.54 billion for the quarter.

"How that pans out depends a little bit on the pace at which we can close deals, and we will be driven by an economic rationale, rather than a desire to have early cash", he said.

Shell has launched the next tranche of its share buyback programme, with a maximum aggregate consideration of $1bn in the period up to and including 27 April 2020. The company plans to cut spending on the program to $1 billion in the period to April 27 from $2.75 billion for the three months ended January 27.

The company's shares were down 3.7% in European trading on Thursday. Finally, Berenberg Bank raised shares of Royal Dutch Shell from a "hold" rating to a "buy" rating in a report on Tuesday, January 14th. Lenders and investors tend to perceive a gearing level below 25% as low risk.

Shell was also hit by a slide in global gas prices from an average of $2.59 per million British thermal units (MMBtu) a year ago from $3.13 per MMBtu in 2018.

Other major oil companies including Chevron, BP, Repsol and Equinor have all written off billions of dollars due to a slump in USA shale prices.

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