Low oil price blamed for cancelling rigs, writing off exploration projects and other cost-cutting as Shell boosts profits following BG takeover.
Royal Dutch Shell and BP beat analysts’ expectations for the third quarter but are clamping down on spending as oil prices remain low.
Shell’s underlying net profit for the three months to the end of September rose 18% to $2.8bn, beating analyst forecasts of $1.7bn. Britain’s biggest company said its performance had improved after a disappointing second quarter as it cut costs following its takeover of BG Group in January.
The Anglo-Dutch company said capital spending would be about $25bn next year – at the low end of its $25-30bn guidance range. Shell and other oil companies have cut spending severely to cope with a plunge in the oil price that has weighed on the industry for more than two years.
Shell’s chief executive, Ben van Beurden, said: “Shell delivered better results this quarter, reflecting strong operational and cost performance. But lower oil prices continue to be a significant challenge across the business, and the outlook remains uncertain.”
At BP, net profit almost halved to $933m in the third quarter from $1.8bn a year earlier but it was better than the average analyst forecast of $780m, according to Reuters.
The company blamed lower oil prices as well as higher costs for writing off exploration projects and cancelling rigs. BP scrapped plans to drill in Australia’s Great Australian Bight last month after commissioning a high-spec oil rig in Singapore.
BP said capital spending would be about $16bn this year, $1bn less than predicted in April, and between $15bn and $17bn next year. BP shares fell 1.8% to 475p but Shell’s shares rose 3.5% to £2.19.
Both companies’ shares have been under pressure as the oil price hovers at about $50 a barrel and rising doubts about Opec’s ability to organise a promised production cut.