Shell Focuses on Divestment and Spending Cuts to Mend Profitability

UK-based Royal Dutch Shell’s poor financial results will soon will soon lead to significant divestitures, reads a note released on Thursday.

CCS earnings totalled $16.7 billion in 2013, compared with $27.2 billion in 2012.

“Our momentum slowed in 2013. We must improve our financial results, achieve better capital efficiency and continue to strengthen our operational performance and project delivery,” Ben van Beurden, CEO of Shell, commented.

The company said it is restructuring its business to improve profitability, focusing on assets sale and spending cuts. Divestment proceeds totalled $0.5 billion in the fourth quarter of 2013. The company foresee to sell 15 billion worth of assets in 2014-15. 

‘Shell is also considering the sale of certain of its marketing assets in Norway and Italy,’ adds the note. 

According to the company, its capital spending will fall to $37 billion this year from $46 billion in 2013. 

Royal Dutch Shell is expected to sell assets in the North Sea for $15 billion, as part of a wider attempt to rebalance its portfolio. As Statoil is pondering an international expansion and a reduced presence in mature fields, this could be the case for Shell as well.