Annual profits at Shell slumped to their lowest level in more than a decade as it grappled with a deep downturn.
Shell’s full year profits were down 37 per cent year-on-year to $7.185 billion from $11.4 billion in 2015.
But Shell management said Europe’s largest oil and gas is ‘turning a corner’ following deep spending cuts, divestments and thousands of job losses last year, with cashflow increasing by 69 percent in the fourth quarter.
With BG Group’s operations fully integrated following its $54 billion acquisition a year ago, Shell said its full year production rose by nearly a quarter from a year earlier to 3.668 million barrels of oil equivalent.
The company’s 2016 capital spending total of $26.9 billion was lower than expected and it stuck to plans to reduce it further in 2017 to around $25 billion. This is at the lower end of the $25-$30 billion range set to run until 2020.
Shell, which has set itself a has a $30 billion debt reduction target, announced two major divestments worth $4.7 billion earlier this week, including the sale of a large part of its North Sea portfolio to private-equity backed Chrysaor.
Earlier this year, Shell sold a stake in a Saudi petrochemical plant for $820 million.
Chief Executive Ben van Beurden said in a statement: “Our strategy is starting to pay off.
“We are reshaping Shell and delivered a good cash flow performance this quarter with over $9 billion in cash flow from operations. Debt has been reduced and, for the second consecutive quarter, free cash flow more than covered our cash dividend.”
See also: 31 Jan 2017