Shell share price falls as it sets out plan to fight falling oil prices as earnings rise 94pc

 
Joe Hall
Follow Joe
Shell is scaling back from big investments. (Source: Getty)

The figures

Shell's shares fell 3.8 per cent in early trading, despite the fact it announced fourth-quarter earnings had soared to $4.2bn (£2.8bn), 93 per cent up from $2.2bn (£1.5bn) for the same quarter a year ago. Full-year earnings also recorded a healthy 14 per cent jump to $19.04bn (£12.6bn), up from $16bn (£10.6bn) a year earlier.

The energy giant has turned around its fortunes after issuing a profit warning last month, but hasn't been totally able to shrug off the impact of crashing oil prices. Naturally, revenues from oil sales are sliding, falling 21 per cent. As a result, the company plans to curtail capital spending by more than $15bn (£9.9bn) over the next three years.

Shell said its earnings rise was triggered primarily by the company's downstream sectors, but was offset by low oil prices.

Dividend was kept stable at $0.47 per share, and will remain at that level in the first quarter of 2015.

Why it's interesting

Most oil producers haven't fared well as oil prices have plummeted, but Shell's plan to deal with falling prices has been laid out on the table: sell, sell, sell. And hold back from big investments. Shell scrapped plans to build a proposed petrochemicals plant in Qatar earlier this year.

What Shell said

Our strategy is delivering with good performance on our three themes of financial performance, capital efficiency and project delivery. These will remain Shell's priorities in 2015, as we continue to balance growth and returns.

Shell has options to further reduce spending, but we are not over-reacting to current low oil prices and keeping our best opportunities on the table.

In short

A strong set of results, particularly when you consider the context of plummeting oil prices and the state Shell was in 12 months ago, when it was forced to issue a profit warning.

Related articles