Oil multinational Royal Dutch Shell announced it would cut 6,500 jobs, more than 6% of its total workforce, in an effort to cut spending across its business.
Before filing its financial results over the first half of Shell\'s financial year, the Dutch company announced that it is cutting FTEs in order to increase margins. Shell also said that the $70bn (£44.8bn, €63.9bn) BG acquisition is on track.
\"We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery,\" the company\'s chief executive Ben van Beuren said in a statement. \"We\'re taking a prudent approach, pulling on powerful financial levers to manage through this downturn, always making sure we have the capacity to pay attractive dividends for shareholders.\"
The Hague-based oil and gas giant reported that net income dropped by 37.44% to $3.84bn, which was higher than the market expectations of $3.25bn-$3.4bn net income. The announcement of cost cuts and the better-than-expected results caused investors to stay hopeful as the company\'s shares rose by 2.3% in pre-market trading.
The spending cuts made by Shell, which include a 20% decrease in capital investments to $30bn, are part of a bigger trend in the oil industry which is suffering from the falling oil price. Since 30 July 2015, brent crude, one of the main oil benchmarks, has halved, causing many oil and gas companies to announce falling profits and cost cuts.
In addition to investment and job cuts, the company is expected to dispose a total of $20bn in assets between 2014 and 2015 and Shell announced that an additional $30bn worth of assets will be sold between 2016 and 2018.
Shell also stated it is selling 33% of its stake in Showa Shell Sekiyu to Japanese oil refiner Idemitsu Kosan for $833m. In adaption to the \"prolonged downturn\" of the oil price forecast by the company, which will be made worse after Iran opens its taps when the US lifts the economic sanctions imposed because of the Islamic Republic\'s nuclear weapons.