Energy
Shell Swings to Loss on Oil Price Decline
The Associated Press
01/29/09 - 03:41 AM EST
Updated from 2:35 a.m. EST
AMSTERDAM, Netherlands -- Royal Dutch Shell(RDS.A), Europe's largest oil company, reported a net loss of $2.81 billion in the fourth quarter as the price of oil fell sharply and it wrote down the value of its inventory.
The company had $8.47 billion in net profit in the same period a year earlier.
The company said Thursday sales fell 24% to $81.1 billion. Crude production was down less than 1% to 3.42 million barrels a day, but Shell's selling price fell 29% to $58.40 as the global economic slowdown hit demand.
CEO Jeroen van der Veer called the results "satisfactory ... given the pressure on demand for oil and gas due to a weaker global economy."
The company's refining division, where the inventory was written down, booked a heavy loss of $6.42 billion compared with a profit of $2.56 billion a year earlier.
The company said refining profits were down 34% on an operating basis, as both intakes volumes and sales volumes fell as a result of weaker demand.
For the full 2008, net profit fell 16% to $26.3 billion.
The company declared a fourth-quarter dividend of 40 cents a share and said it intended to raise that by 2 cents in the next quarter.
Shell's fourth-quarter earnings on a "current cost of supplies" basis -- which strips out the effect of the fall in oil prices on inventory -- would have been down 28% to $4.78 billion, the company said.
Shell's exploration and production division saw earnings fall 24% to $3.7 billion, in line with the fall in oil prices.