Shell reports $2.81 billion loss in fourth quarter

[Freddie Stubbs]

Source: Associated Press

AMSTERDAM, Netherlands – Royal Dutch Shell PLC, Europe's largest oil company, said Thursday it swung to a net loss of $2.81 billion in the fourth quarter, as the price of oil fell sharply and it wrote down the value of inventory.

In the same period a year earlier, Shell had $8.47 billion in net profit.

The company said fourth quarter sales fell 24 percent to $81.1 billion. Crude production was down less than one percent to 3.42 million barrels per day, but Shell's selling price fell 29 percent to $58.40.

Chief executive Jeroen van der Veer called the results "satisfactory...given the pressure on demand for oil and gas due to a weaker global economy."

Read more: http://news.yahoo.com/s/ap/20090129/ap_on_bi_ge/eu_netherlands_earns_shell

[onehandle]

1. Shell reports $2.81 billion loss in fourth quarter

Source: AP

AMSTERDAM, Netherlands – Royal Dutch Shell PLC, Europe's largest oil company, said Thursday it swung to a net loss of $2.81 billion in the fourth quarter, as the price of oil fell sharply and it wrote down the value of inventory.

In the same period a year earlier, Shell had $8.47 billion in net profit.

The company said fourth quarter sales fell 24 percent to $81.1 billion. Crude production was down less than one percent to 3.42 million barrels per day, but Shell's selling price fell 29 percent to $58.40.

Chief executive Jeroen van der Veer called the results "satisfactory...given the pressure on demand for oil and gas due to a weaker global economy."

Read more: http://news.yahoo.com/s/ap/20090129/ap_on_bi_ge/eu_netherlands_earns_shell

[newfie11]

2. Poor babies!!

I hope it continues!

[grannie4peace]

3. asswipes!

[muriel_volestrangler]

4. Or: "Shell’s fourth quarter profits tumble to $4.8bn" (Financial Times)

Net earnings on a current cost of supply basis, adjusting for the effect of price changes on inventories, were $4.8bn in the fourth quarter, down 28 per cent from $6.7bn in the equivalent period of 2007. The underlying profit, excluding one-off items, was slightly below the analysts’ consensus expectations.

Full year profits for 2008 were $31.4bn, up 14 per cent from $27.6bn, the previous European record, in 2007.

The dividend for the first quarter of 2009 will be up 5 per cent at 42 cents, compared to an 11 per cent increase in 2008.

The main reason for the drop in profits in the fourth quarter was the fall in the oil price, which averaged $57.60 per barrel, compared to about $111 in the third quarter and $83 in the fourth quarter of 2007.

http://www.ft.com/cms/s/0/0c2f61b2-edd4-11dd-b791-0000779fd2ac.html

All depends on how you look at it.

[wordpix]

5. this PROVES these BigOil asswipes were profiting from the $100+/barrel oil beyond

their "regular" obscene profits. Their production is down 1% but selling price fell 29%---that's b/c their selling price was way beyond what the market would bear over time. Perhaps NOW Congress should investigate BigOil price fixing, Wall St. speculation and the obscene profits earned last year. Maybe a little regulation and enforcement would help. :shrug:

[Demeter]

6. Wrote Down the Value of Inventory

Does this make sense to any accounting types?

It sounds like a paper loss---counting the profits before the chickens were sold.

[melm00se]

7. yes...

you buy your raw materials (in this case oil) at $100/barrel, you make your finished goods and mark up the finished goods by, say, 10% you have inventory valued at $110. which is all fine and dandy unless the cost of raw materials drops and now your finished goods are only saleable at $55 ($50/barrel + 10%).

How do you account for the loss of value?

you have to write down your inventory.

this is the danger that most folks just don't seem to get when you are dealing with volatile pricing in your commodity. one time it's feast: you bought at $50 + 10% = $55 but the market says it's worth $110 and then the next it's the reverse.

managing a business that relies heavily on commodities is a tough gig and it's not just oil, it can be computer memory chips, companies that use gold, platinum, corn, soybeans, and the like.