Shell Reports Biggest Loss in Over a Decade

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By Jacob Maslow

As gas prices continue to slump, Royal Dutch Shell Plc (LON: RDSA) reported its biggest loss in over 16 years after lowering its oil price expectations and abandoning some of its projects. These two factors resulted in an $8 billion charge.

Shell’s loss demonstrates the challenges that oil companies are facing as prices continue to slump. Italian oil group Eni SpA (NYSE: E) also reported a third-quarter loss as did BP (NYSE: BP) and Total SA (NYSE: TOT).

Since the end of last year, the oil price rate has erased nearly $500 billion from the Bloomberg World Oil and Gas Index, which tracks Global energy stocks including Chevron Corp. (NYSE: CVX), Exxon Mobil Inc. (NYSE: XOM) and Shell.

Shell reported a $7.42 billion net loss in the third quarter, down from a $4.46 billion profit the previous year. The company will be buying BG Group Plc (LON: BG) in the largest deal in the energy industry this year.

With adjustments for inventory changes in one-time items, Shell’s profit declined 70% to just $1.77 billion. The figure missed analysts’ estimates of $2.92 billion.

The company took a $4.61 billion charge because of its withdrawal from offshore drilling projects in Alaska and abandoning its oil sands project in Canada. In addition, cuts to the company’s projected oil and natural gas prices added $3.69 billion in charges.

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