Shares in Royal Dutch Shell edged lower early on Wednesday (4 May), after the oil giant posted a sharp decline in first quarter earnings as the ongoing weakness in oil prices took its toll on the company.
The FTSE 100 group said in the first three months of the year, its current cost of supply earnings (CSS) slumped 89% year-on-year to $814 million (£561.6m, €709.3), while CSS before exceptional items was down more than 58% to $1.6bn, managing to beat analysts' estimates of a decline to $1bn.
A persistently weak environment in the refinery industry, as well as continuing declines in the price of oil, gas and liquefied natural gas all contributed to the sharp decline in earnings, the Anglo-Dutch company said in a statement.
However, the London-listed group added its cost-saving strategy was beginning to pay off as lower costs had more than offset an increase in operating expenses, related to the group's £35bn takeover of sector peer BG Group earlier this year.
Shell added that its forecast capital expenditure to be approximately around $30bn for the current financial year, approximately $3bn lower than the estimate published when it announced the BG deal in February.
"We continue to reduce our spending levels, to capture cost opportunities and manage the financial framework in today's lower oil price environment," said group chief executive Ben Van Beurden.
"The combination with BG is off to a strong start, as a result of detailed forward planning before the completion of the transaction. This will likely result in accelerated delivery of the synergies from the acquisition, and at a lower cost than we originally set out."
Shell, which added net income fell to $484m from $939m in the first quarter of 2015, indicated it will keep its dividend per share unchanged at $0.47.
On 25 April, the group unveiled plans to close three of its offices in the UK, including BG's headquarters in Reading, in a move that will affect approximately 1,600 employees.