Royal Dutch Shell expects profit to plunge as oil sell-off continues – FINANCIAL
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Royal Dutch Shell expects profit to plunge as oil sell-off continues

Shell has estimated that it would break even on the acquisition with oil prices at US$60 a barrel. But industry analysts say the price of oil could fall to about US$20 a barrel this year.

LONDON – Within the latest manifestation of industry damage in the plummeting cost of oil, Royal Dutch Shell said Wednesday it expected its profit for the fourth quarter of 2015 to become about half of the items it had been in the comparable period last year.

Shell issued the preliminary estimates before a much-anticipated vote through the company’s shareholders next week around the proposed acquisition of the BG Group, an oil and gas producer. Investors have been skeptical about the BG deal, which was announced in April, when gas and oil prices were much higher.

Still, many analysts expect Shell shareholders to approve the deal in the meeting in a few days. As well as on Wednesday, one large investor in Shell, Norway’s US$790 billion sovereign wealth fund, said that it would vote in favour of the deal.

BG also released preliminary results Wednesday, predicting that it is full-year earnings for 2015 would come in more than 57 per cent underneath the previous year’s profits.

Shell estimated that its profit for that quarter, excluding inventory changes and one-time charges, would fall between 42 per cent and 51 percent, to between US$1.6 billion and US$1.9 billion. The company posted profit of about US$3.3 billion within the fourth quarter of 2014.

Shell, which is based in The Hague, estimated that profit its 2015 would be between US$10.4 billion and US$10.7 billion, sharply down from about US$22.6 billion in 2014.

BG, which is located in Reading, England, also released preliminary figures Wednesday, stating that its earnings for last year, excluding write-offs, would be about US$1.7 billion, compared with about US$4 billion in 2014. The organization said it would earn at least US$1.4 billion from its liquefied gas business.


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