6500 Lose Job As Shell Cuts Cost

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Netherlands-based Royal Dutch Shell has announced a job layoff to the tune of 6,500 staff and contractor positions this year.  Oil and natural gas production fell by 11%, which approximates to 2.73 million barrels a day during the second quarter, this can be attributed partly to the sale of assets in North America and security concerns in Nigeria.  Reducing their workforce is in a bid to reduce their operating costs by 10% and reduce capital investment by 20%.

Ben van Beurden, CEO, said, “We are anticipating some 6,500 staff and direct contractor reductions in 2015.”

The strategy is to reassure its investors that it can withstand an extended period of dwindling oil prices in spite of their planned acquisition of the BG group for about $70 billion.  The company will pay a dividend of 47 cents a share on its second quarter earnings.

The company announced its plans to raise $50 billion from asset sales between 2014 and 2018 after their  second-quarter profit showed a net income slide of 25%.  The company’s CEO remarked that they see long-term potential in their investments in the offshore oil fields in Alaska over the next two years and production would start by 2030. 

Chief Executive Ben van Beurden said, “Today’s oil price downturn could last for several years and Shell’s planning assumptions reflect today’s market realities.  The company has to be resilient in today’s oil price environment, even though we see the potential for a return to a $70-$90 oil price band in the medium term.”

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