Poor Upstream Results Hint at Reduction in Investment

Royal Dutch Shell announced new global restructuring programmes in 2015, while Austria’s OMV revised downwards its annual investment for 2015 and 2016 to a range of EUR 2.5 to 3.0 billion from EUR 3.9.

“We are stepping up our drive for stronger capital efficiency, whilst being careful not to over-react to the recent fall in oil price” Shell’s CEO Ben van Beurden commented in a note released on Thursday.

The company missed the profit forecasts by more than 20%, and it explained the weak upstream results in light of write downs and forex losses. 

The Anglo-Dutch company announced cuts in the upstream segment, adding that it expects to reduce operating costs in 2015. The company announced a $15 billion cut in spending. 

The rapid fall of oil prices in recent months also impacted OMV.

“There has been a seismic shift for the industry in recent months. OMV has a responsibility to react accordingly and with caution” OMV CEO Gerhard Roiss said in a separate press release. 

The Austrian company, which signed an amendment of its existing gas contracts with Gazprom on Wednesday, said it adjusted both its CAPEX and its exploration budget.

“We are prepared to make further reductions to our investment program if require” OMV CFO David C. Davies explained.