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Royal Dutch Shell expects profit to plunge as oil sell-off continues

Shell has estimated that it would break even on the acquisition with oil prices at US$60 a barrel. But industry analysts say the price of oil could fall to about US$20 a barrel this year.

LONDON – In the latest manifestation of industry damage from the plummeting price of oil, Royal Dutch Shell said Wednesday that it expected its profit for that fourth quarter of 2015 to be about half of the items it was in the comparable period last year.

Shell issued the preliminary estimates before a much-anticipated vote through the company’s shareholders next week on the proposed acquisition of the BG Group, an oil and gas producer. Investors have been skeptical concerning the BG deal, which was announced in April, when gas and oil prices were much higher.

Still, many analysts expect Shell shareholders to approve the deal in the meeting next week. As well as on Wednesday, one large investor in Shell, Norway’s US$790 billion sovereign wealth fund, asserted it might vote in favour of the offer.

BG also released preliminary results Wednesday, predicting that it is full-year earnings for 2015 would come in additional than 57 per cent underneath the previous year’s profits.

Shell estimated that its profit for the quarter, excluding inventory changes and one-time charges, would fall between 42 percent and 51 percent, to between US$1.6 billion and US$1.9 billion. The company posted profit of about US$3.3 billion within the fourth quarter of 2014.

Shell, which is based in The Hague, estimated that profit for all of 2015 could be between US$10.4 billion and US$10.7 billion, sharply down from about US$22.6 billion in 2014.

BG, that is based in Reading, England, also released preliminary figures Wednesday, stating that its earnings for last year, excluding write-offs, would be about US$1.7 billion, compared with about US$4 billion in 2014. The company said hello would earn at least US$1.4 billion from its liquefied gas business.

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