Shell Earnings Plummet 60%

CBJ — Royal Dutch Shell saw its first-quarter earnings plummet almost 60% as crude oil prices remain low with a glut of excess on the global market due to countries such as Saudi Arabia, Russia and Iran, which continue to purposely overproduce. The move has annoyed other OPEC nations, but a change in tactics from the aforementioned nations seems unlikely at this point.

Shell says that profit adjusted for changes in the value of inventories and excluding one-time items dropped to $1.55 billion from $3.74 billion in the same period of 2015.

The results came after Shell completed a $54 billion takeover of BG Group — a deal that increases the company’s proven reserves of oil and natural gas by 25%. While critics questioned the deal following the drop in oil prices, Shell said it would provide opportunities to cut costs by eliminating duplication.

Oil companies around the world are slashing jobs and postponing investments to adjust to lower energy prices.

Shell forecast capital investments of around $30 billion this year, 36 per cent less than Shell and BG invested in 2014. Operating expenses will be around $40 billion, compared with a combined $53 billion in 2014, Shell said.

First-quarter net income fell almost 90% to $484 million.