Shell Takes $2.6bn Hit from Ending Arctic Drilling Operations

Shell reported a $6.1 billion loss on its third quarter 2015 earnings — 216 percent lower than the same quarter a year ago — after announcing announcing it will cease further exploration activity in offshore Alaska for the foreseeable future.

Earnings per share for the third quarter of 2015 plummeted 70 percent compared to the third quarter of 2014.

Shell’s third quarter 2015 earnings were $1.8 billon on a current cost of supplies (CCS) basis, compared with $5.8 billion for the third quarter of 2014, a decrease of 70 percent.

Shell took an $8.2 billion loss due to decisions to halt longer-term projects and dropping oil and gas prices. This includes a $2.6 billion loss associated with the company’s decision to halt drilling operations in Alaska, a $2 billion loss associated with stopping construction of the Carmon Creek in-situ oil project in Canada, and a $3.6 billion hit triggered by the downward revision of the long-term oil and gas price outlook.

When combined with other charges and net gains, the oil giant’s overall net charges totaled $7.9 billion.

According to Shell CEO Ven van Beurden, the company’s plan to purchase UK-based oil and natural gas company BG Group is on track for completion in early 2016 and “is a springboard to focus Shell into fewer and more profitable themes, especially deep water and integrated gas.”

Shell announced its plan to buy BG Group in April.