Shell Cuts 6,500 Jobs and Slashes Spending on Prolonged Downturn

Royal Dutch Shell Plc said it’s preparing for a “prolonged downturn” by cutting thousands of jobs and slashing billions of dollars in investments over the next two years. The shares gained the most in more than seven months.

The current downturn in oil prices could last for several years, the company said Thursday, compared with a forecast in April that prices would return to $90 by 2018. Shell is cutting 6,500 jobs this year and plans to reduce capital investment by $7 billion, it said in a statement.

Shell joins BP Plc and Chevron Corp. in cutting costs as the world’s biggest oil producers grapple with a 50 percent slump in crude prices in the past year. They are reducing jobs, deferring projects and selling assets to strengthen their balance sheets and maintain dividend payouts.

“Shell is highlighting the lower for longer oil price scenario and setting up their business to deal with that,” said Aneek Haq, head of oil and gas at Exane BNP Paribas in London. “They’ve now gone further than their peers on cost cuts in this scenario.”

The company’s B shares, the most widely traded, rose 4.7 percent, the biggest gain since Dec. 16. The stock has dropped 17 percent this year.

more...

http://www.bloomberg.com/news/articles/2015-07-30/shell-plans-to-cut-6-500-jobs-reduce-investment-by-7-billion