The company, which is buying BG Group in the industry’s largest deal this year, reported a third-quarter net loss of $7.42bn, compared with a profit of $4.46bn a year earlier.
The charges include $4.61bn resulting from the withdrawal from drilling in Alaska and an oil-sands project in Canada, and $3.69bn triggered by cuts to its outlook for oil and natural gas prices.
Adjusted for these one-time items and inventory changes, profit dropped 70% to $1.77bn.
The loss increases the pressure on Europe’s biggest oil produce, which has cut jobs and reduced spending this year as chief executive Ben Van Beurden prepares the company for prolonged market stagnation.
Crude’s decline in the past 16 months has been brutal to the industry, driving down Shell’s market value to the lowest this decade and prompting concern that it may be overpaying for BG.
“While our cash flow and our operating performance in the quarter were strong, the headline numbers we’re reporting today include substantial charges,” Mr Van Beurden, 57, said.
Shell Reports .4 Billion Loss, Blaming Low Oil And Gas Prices https://t.co/QjQgQTStqF— Roberto Pliego R (@robertopliegor) October 29, 2015
“These charges reflect both a lower oil and gas price outlook.” Average Brent crude prices fell 50% in the quarter from a year earlier to $51.30 a barrel, the lowest since 2009.
Shell halted its 80,000 barrel-a-day Carmon Creek oil sands project in Alberta, Canada, the company said this week.
It walked away from drilling in Alaska in September after $7bn of spending ended with a well that failed to find any meaningful quantities of oil or gas. The company’s shares retreated to a six-year low after the decision.
Shell, which is buying BG for more than $70bn, said in July the deal will add to cash flow at $67 a barrel in 2016.
The acquisition, to be completed early next year, will give Shell deep water assets in Brazil, boost its position in Australian gas and expand its access to the US’s emerging liquefied natural gas export industry.
Thursday’s earnings report “is a big clean up exercise ahead of the BG deal,” Exane BNP Paribas analyst Jeremy Aston said. Eni, Italy’s largest oil producer, also reported a net loss for the third quarter yesterday.
France’s Total posted a profit of $1.08bn, 69% lower than a year earlier, as rising oil and gas production and growing profits from its refining operations helped to offset the slump in crude prices.
BG is due to announce earnings today. Exxon Mobil, the world’s biggest oil company by market value, and Chevron are also scheduled to release results on Friday. BP’s third-quarter adjusted profit dropped 40% to $1.82bn. Statoil’s adjusted net income fell 59%.