Shell halts Arctic drilling as new chief unveils overhaul
Fourth quarter profits declined to $2.1 billion from $7.3 billion a year earlier
Shell boss Ben van Beurden declared that 2014 would be a year of “changing emphasis” as he unveiled a 71 per cent dive in fourth-quarter profits, a new approach to business and suspended its controversial Arctic drilling programme.
Van Beurden, who shocked the market this month with Shell’s first profits warning in 10 years, admitted today that the oil giant could "sharpen up in a number of areas".
Investors were cheered by his pledge to act, and the shares rose by 63p, or 2.81 per cent, to 2305.5p.
Unveiling his first set of results since taking the job at the start of the year, van Beurden vowed to set an “agenda for sharper performance and rigorous capital discipline”, beginning with the suspension of drilling for oil in Alaska’s Arctic seas.
"We must improve our financial results, achieve better capital efficiency and continue to strengthen our operational performance and project deliver," said van Beurden.
"2014 will be the year where we are changing emphasis, to improve our returns and cash flow performance."
The change in emphasis will see Shell selling up to $15 billion (£9 billion) of assets over the next two years to raise cash; cutting investment by a fifth, from $46 billion to around $37 billion in 2014; and improving efficiency by merging recent acquisitions into the main business as well as “restructuring in some areas of the company”.
He indicated that further disposals in North America could be on the cards. Shell’s decision to halt drilling in Alaska comes after a federal court ruling last week that the US government improperly relied on “inadequate information” in awarding licences for exploration there, which Shell said “raises substantial obstacles to Shell’s plans”.
Shell said fourth-quarter profits fell to $2.1 billion, from $7.3 billion a year earlier, as it took a net charge of $763 million for the period. Some $687 million of the charge related to write-downs on its US shale gas business, which has been hit by falling prices, as well as its Alaskan drilling campaign.
Shell’s fourth-quarter profits on its "upstream" oil and gas production business tumbled by 70 per cent, amid continuing disruption in Nigeria.
Meanwhile, the company’s “downstream” chemicals and refining operation saw profits drop by 57 per cent.
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