[LONDON] Royal Dutch Shell on Wednesday announced an 89 per cent drop in net profit for the first quarter, blamed on slumping oil prices, adding that investment would be lower than expected.
Profit after tax stood at US$484 million (421 million euros) in the January-March period, down from US$4.43 billion in the first quarter of 2015, the Anglo-Dutch energy group said in an earnings statement.
Stripping out exceptional costs and changes to the value of Shell's oil stockpiles, profit retreated 58 per cent to US$1.55 billion.
Shell, which recently completed a mega takeover of smaller British rival BG Group, added that it planned this year to invest less than had been forecast.
"We continue to reduce our spending levels, to capture cost opportunities and manage the financial framework in today's lower oil price environment," Royal Dutch Shell Chief Executive Officer Ben van Beurden said in the statement.
"The combination with BG is off to a strong start, as a result of detailed forward planning before the completion of the transaction. This will likely result in accelerated delivery of the synergies from the acquisition, and at a lower cost than we originally set out." However van Beurden noted that capital investment would be around US$30 billion this year, down from an estimate of US$33 billion. The revised spending level would meanwhile be some 36 per cent lower compared with the combined investment of Shell and BG during 2014.
The global oil market had nosedived from above US$100 in mid-2014 to 13-year lows of around US$27 in February, plagued by the stubborn supply glut. But prices have since rebounded to trade around US$45 a barrel.
The slump in prices has caused energy groups worldwide to cut spending, slash jobs and sell assets.
However Shell still pressed ahead with its £47-billion (US$68-billion, 60 billion-euros) takeover of BG Group, in a deal aimed at strengthening Shell's position in the liquefied natural gas (LNG) market.