Shell Announces Plans to Reduce Capex
Feeling the pressure from the continued fall in oil prices, Shell Oil has made official announcements indicating how the company aims to remain resilient through the crisis. The multinational has reported a massively disappointing second quarter financial, showing that earnings during the period stood at $3.4 billion (cost of supplies basis). Compared with the $5.1 billion recorded a year back during the same period, the massive fall in figures is indicative of the pressure that is currently bearing down on the company.
To combat the slump in oil prices, Shell has adopted several strategies including job cuts and cutbacks on oil exploration projects. The company has also announced plans to further reduce Capex for 2015 to $30 billion. If it succeeds in this strategy, Shell would have pulled down capital expenditure by 20% when compared with last year’s situation.
As explained by CEO van Beurden, the company’s focus is on remaining resilient in the face of the difficult market conditions and to achieve this objective, bringing down Capex is a key strategic approach. He describes these as the ‘prudent approach’ that will allow Shell to remain afloat, while giving investors reasonable returns despite the poor conditions in the segment. Shell remains committed to offering its investors a dividend not less than $1.88 per share over the current and following year.