Shell posts lower first-quarter net profits

Anglo-Dutch energy giant Royal Dutch Shell, which is buying British rival BG Group, posted falling first-quarter profits Thursday on sliding oil prices.

Net profit or earnings after tax dipped two percent to $4.4 billion (4.0 billion euros) in the three months to March compared a year earlier, it said in a results statement.

Shell also revealed that profit, adjusted for one-off items and inventory changes, sank 56 percent to $3.2 billion in the reporting period.

That still beat market expectations of $2.5 billion, according to analysts polled by Bloomberg.

"Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices," said chief executive Ben van Beurden.

"Meanwhile, in what is clearly a difficult industry environment, we continue to take steps to further improve competitive performance by redoubling our efforts to drive a sharper focus on the bottom line in Shell."

So far this year, Shell has sold non-strategic assets worth more than $2.0 billion as it seeks to combat the impact of tumbling world oil prices.

The group had launched plans in January to slash spending by more than $15 billion to counter the impact of the collapsing oil market.

Shell added Thursday that it continues to reduce its operating costs and capital spending, and has deferred and reshaped new projects in order to achieve further efficiencies and savings.

Last month meanwhile, Shell unveiled a mega-takeover of BG Group worth £47 billion, as the two firms consolidate their positions in a sector slammed by the oil price slump.

"Looking ahead, the proposed combination with BG ... would create a stronger company for both sets of shareholders," added van Beurden.

"The combination with BG would accelerate Shell's growth strategy in deep water and liquefied natural gas, and create a springboard for further optimisation of our asset base."

The new company will be worth twice the value of BP and overtake US energy giant Chevron Corp. upon finalising the sector's biggest deal in a decade.

"It's by far the biggest acquisition" we have ever done," said Shell's chief financial officer Simon Henry in a teleconference to reporters, arguing it was a "strategic fit".

He added: "The integration challenges are much simpler than for some previous integrations we made. BG's portfolio is relatively clear, and it's a good fit with Shell activities

"It should be something we can manage in the next couple of years."

Crude oil prices lost more than half their value between last June and January owing to a supply glut fuelled largely by robust output from US shale rock and weak global demand.

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