Jan 29, 2015 3:42 AM
Royal Dutch Shell reports 57 percent drop in net income
The Associated Press
LONDON (AP) Royal Dutch Shell PLC, Europe's largest oil company by market value, said Thursday that fourth quarter net income fell 57 percent to $773 million and that it would cap spending this year in response to falling oil prices.
Shell is one first big producers to report earnings since the recent plunge in oil prices, so the results are likely to set the tone for its peers. The price of Brent crude dropped about 50 percent last year.
Fourth quarter earnings on current cost of supplies basis, which excludes the impact of changes in the oil price on inventory, rose 93 percent to $4.2 billion. For the year, such earnings rose 14 percent to $19 billion.
Chief Executive Officer Ben van Beurden said Shell's efforts to balance growth and returns had positioned the company well to handle the decline in prices. While lower oil prices and last year's divestments are likely to reduce this year's cash flow, the company must be careful not to "over-react."
"We plan to cap our organic 2015 spending at 2014 levels, retain flexibility for both opportunistic, incremental plays and to further reduce spending should market conditions warrant that step," he said in a statement.