Royal Dutch Shell posted its worst third quarter results in over a decade on Thursday as the company took $7.89 billion in charges.
Shell booked a $7.41 billion loss attributable to shareholders and a $6.1 billion loss on a current cost of supplies (CCS) basis, a huge slide from CCS earnings of $5.3 billion for the same quarter a year ago.
Basic CCS losses per share hit $0.97, down from earnings per share of $0.83 in the year ago quarter.
The loss is the largest that Shell has reported in at least a decade and a half, Bloomberg said.
“While our cash flow and our operating performance in the quarter were strong, the headline numbers we’re reporting today include substantial charges. These charges reflect both a lower oil and gas price outlook and the firm steps we are taking to review and reduce Shell’s longer-term option set,”CEO Ben van Beurden said.
Shell’s bottom line was pummeled by a $7.89 billion net charge, compared with a net charge of $581 million for the third quarter 2014.
Upstream earnings included a net charge of $8.21 billion, mainly related to “management decisions to halt longer-term projects and a downward revision to the oil and gas price outlook.”
That net charge included $4.61 billion related to impairments, redundancy and restructuring, and other items such as contract provisions and well write-offs tied to the firm’s decision to cease Alaska drilling activities for the foreseeable future and the Carmon Creek project.
Charges for Alaska were $2.58 billion, that included $755 million associated with well write-offs, and charges for Carmon Creek were $2.03 billion.
The net charge also reflected impairment charges of $3.68 billion triggered by the downward revision of the long-term oil and gas price outlook, including $2.31 billion related to North America shale gas properties.
Upstream earnings for the third quarter 2014 included a net charge of $394 million.
“We have halted exploration activities offshore Alaska, and stopped the construction of the Carmon Creek in-situ oil project in Canada. These are difficult, but impactful decisions. I am determined that Shell will become a more focused and competitive company as a result,” van Beurden said.
The company’s upstream division posted a $425 million loss, down from a profit of $4.34 billion during the same quarter last year.
Shell’s downstream segment earned $2.61 billion compared to $2.96 billion last quarter and $1.79 billion in the year ago quarter.
Cash flow from operating activities fell to $11.23 billion from $6.05 billion last quarter.
The company added that its pending $70 billion merger with UK-based BG Group remains on track to be completed in early 2016.
Earlier this month, the Australian Competition and Consumer Commission (ACCC) pushed back its final decision on the deal by a week.
The ACCC now expects to make a final decision on the deal by November 19.
The merger must also still win approval from Chinese authorities.