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Shell, BP results improve from cost cuts amid low oil

LONDON, November 2, 2016

Royal Dutch Shell and BP posted better-than-expected third-quarter profits, making progress with efforts to stabilise profits even during a quarter when oil prices averaged less than $46 a barrel, a report said.

Shell returned to profit, posting the equivalent of $1.4 billion in net income for the third quarter of 2016 after reporting a net loss of $6.1 billion a year earlier, reported the Wall Street Journal (WSJ).

BP posted net earnings of $1.7 billion for the quarter, up 35 per cent from $1.2 billion a year earlier.

Both companies said they expect oil supply and demand to come back into balance after being glutted long enough to sink prices by more than 50 per cent.

Oil prices generally were lower in the third quarter of 2016 compared with the same time in 2015, averaging $45.86 a barrel for Brent crude, the international benchmark, the WSJ report said.

The prices are down more than 50 per cent from the heights of $100 a barrel or more they traded at for much of 2011 to 2014, it highlighted.

Shell said next year it expects to spend $25 billion on finding and developing new oil and natural-gas projects, at the lower end of a spending range it disclosed this year to investors.

BP said it planned capital spending in 2016 of $16 billion, down from the $17 billion to $19 billion previously forecast. Exxon slashed its capital and exploration spending 45 per cent in the third quarter from a year earlier.

BP is looking at advancing two new large oil and natural-gas developments this year, taking the total number approved in 2016 to five, chief financial officer (CFO) Brian Gilvary was quoted as saying in the report.

Shell’s CFO Simon Henry said: “We’re planning next year on $50 a barrel. We’re planning the balance sheet for potentially even lower than that, and we’re building the portfolio to be robust at anything above $50 a barrel.”

Tags: BP | Shell | Oil | earnings | profits |

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