Shell's profits hit by big Arctic, Canadian write-offs
By Karolin Schaps and Ron Bousso
LONDON (Reuters) - Royal Dutch Shell (RDSa.L: Quote) on Thursday reported a hefty $8.2 billion charge, equivalent to around 5 percent of its market value, due to write-offs on projects in the Alaskan Arctic and Canada as Europe's biggest oil producer grapples with weak oil prices.
The oil major's third-quarter current cost of supplies earnings, the company's definition of net income, came in at $1.8 billion, below analysts' expectations of $2.74 billion and 70 percent lower than a year ago.
"In headline terms, this was a challenging quarter," said Shell Chief Financial Officer Simon Henry in a video statement.
However, Shell's bumper $70 billion deal to acquire smaller gas-focused rival BG Group BG.L remained on track for completion early next year, it said, as it awaits regulatory approvals from China and Australia.
"The underlying performance does give us confidence to capture the significant value that is available in the BG combination and over time we will deliver that value back to shareholders," Henry said.
Shell's $8.2 billion charge included a $2.6 billion write-off due to its withdrawal from the Alaskan Arctic, as well as an additional $2 billion charge made on the Carmon Creek oil sands project in Canada, which the company suspended on Tuesday. It also reflected other impairment charges of $3.7 billion triggered by the downward revision of the long-term oil and gas price outlook, Shell said.
Shell's London-listed A shares were down 2 percent at 0825 GMT.
Shell's upstream oil and gas production division, swung to a loss for the first time in years. Its downstream refining and marketing division, however, benefited from weak prices to run refineries more profitably, with its net income up 46 percent at $2.6 billion. Continued...