Royal Dutch Shell halts Alaska exploration as profits fall
- 30 January 2014
- From the section Business
Oil giant Royal Dutch Shell is stepping up asset disposals as part of a strategy that will see the company "changing emphasis" in 2014.
The changes will involve Shell stopping its exploration programme in Alaska.
On Thursday, Shell posted 'clean' profits - which strip out the impact of oil price movements - of $2.9bn (£1.7bn) for the last quarter of 2013, down from $5.6bn on the period in 2012.
It comes a week after Shell issued a "significant" profits warning.
Shell 'B' shares were up 3% in early afternoon London trading, but closed up just 1%.
New chief executive Ben van Beurden, a month into the job, said on Thursday that "the landscape the company had expected has changed".
On 17 January, Shell, the world's third-largest publicly-quoted oil company, surprised investors with a warning about profits for the quarter to the end of December, blaming high exploration costs, pressures across the oil industry and disruption in Nigeria.
Thursday's quarterly profits were broadly in line with expectations following the profits warning, and took full-year 'clean' profits to $19.5bn, against $25.3bn in 2012.
Mr van Beurden took over as chief executive on 1 January, replacing Peter Voser.
The new boss said in a statement on Thursday: "Our overall strategy remains robust, but 2014 will be a year where we are changing emphasis, to improve our returns and cash flow performance."
Capital spending will fall to $37bn this year from $46bn in 2013, Shell said, adding that, for the time being, it was also scrapping a controversial exploration programme in Alaska.
Last week, a US court ruled that a full assessment of the environmental risk associated with the Alaska exploration had not been carried out by the US government.
Shell had spent around $4.5bn exploring for oil off the coast of Alaska since 2005, but has faced strong environmental opposition.
"We are making hard choices in our world-wide portfolio to improve Shell's capital efficiency", Mr van Beurden said.
The Anglo-Dutch company said it would increase the pace of asset sales, targeting disposals of $15bn this year.
Mr van Beurden said: "The landscape the company had expected has changed. Factors such as the worsening security situation in Nigeria in 2013, and delays to non-operated projects in several other countries, have altered the outlook.
"Oil prices remain high globally, but North America natural gas prices and associated crude markers remain low."