Having reduced its number of new investments last year and more recently exiting the Bab sour gas project in Abu Dhabi, CEO Ben van Beurden confirmed overnight the UK supermajor had postponed final investment decision on LNG Canada at Kitimat and on Bonga South West in deepwater Nigeria.
Federal and provincial governments gave their environmental approvals to LNG Canada, in which Shell has a 50% interest, last June, albeit with a number of conditions.
It was due to start production by 2022, with 7500 workers to be employed during peak construction at Kitimat, with $8 billion spent on goods and services in Canada, including $3 billion in British Columbia.
Shell’s cost of supply earnings for the December quarter of 2015 was $US1.8 billion ($A2.5 billion) compared to $4.2 billion a year prior, with earnings per share also plummeting 44% from Q4 2014 – though they could have been worse had it not been for strong downstream results.
The CEO was confident Shell retained a strong balance sheet position, as Shell cut operating costs and capital investment by $12.5 billion compared to 2014 and it will continue to cut this year, though its lower costs only partly offset upstream losses stemming from low oil prices.
This seemed to play well with RBC Capital Markets, which reiterated its ‘outperform’ recommendation on Shell’s stock after the results.
“We were not expecting any fireworks given Shell gave divisional guidance just a couple of weeks ago, however we would highlight that most divisions came in towards the top end of management's guidance range, which we view as positive,” RBC said.
"We are making substantial changes in the company, reorganising our upstream and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices.”
This will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both Shell and its takeover target BG Group.
“Overall, these are challenging times for the industry, and we are responding with urgency and determination – but also with a great sense of excitement for the future,” he added.
"Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that.”
Statoil is also stepping up its “improvement program” by tightening its capital and exploration spend, and has “substantially improved” its non-sanctioned project portfolio.
“More than 80% of the operated projects, with start-up by 2022, have a break-even oil price below $50 per barrel of oil equivalent,” CEO Eldar Saetre said.
The Norwegian major posted 15.2 billion Norwegian crowns ($A2.48 billion) in adjusted earnings, down 26.9 billion NOK in the same period the year before – a 44% drop.
Statoil posted a net loss of 9.2 billion NOK for the December quarter of 2015, worse than the 8.9 billion NOK it reported a year prior.
