Shell Targets Spending as Profit Plunges 83%
Royal Dutch Shell PLC said Wednesday that it would bring the hammer down harder on spending as it contends with a nearly two-year slump in oil prices that dragged the company’s first-quarter earnings down 83% compared with a year earlier. In its first results since completing a landmark acquisition of BG Group PLC earlier this year, the Anglo-Dutch oil giant said Wednesday that it plans to slash its capital spending by nearly 10% in 2016 and expects its operating costs to fall to $40 billion, down $13 billion compared with 2014 levels. “In very simple terms, we’re taking costs out of projects, and projects out of the funnel,” Shell’s chief financial officer Simon Henry told journalists Wednesday. The spending cuts come as Shell reported a sharp drop in quarterly profit on a current cost-of-supplies basis—a number similar to the net income that U.S. oil companies report—to $800 million, down […]
The increased borrowing for an economy already swimming in debt adds to concerns about growing bubbles in certain major asset classes, such as real estate and commodities, and a bond market seeing a rise in corporate defaults.
Gov. Alejandro Garcia Padilla warned that Puerto Rico bond investors face a cascade of defaults starting in July unless Congress passes legislation that facilitates a restructuring of the commonwealth’s debt.
A Moody's team of analysts led by Erick Rodrigues said in a report that the number of companies facing high funding risks rose to 33 percent last year, from 28 percent in 2014. More debt is maturing than companies can generate cash to make payments, while banks are refinancing fewer loans, the analysts said.
The parent firm of British Gas takes a hit to its market value on plans to raise up to £750m by issuing 350 million shares.
Centrica Stock Falls 10% On Share Sale Plans
The owner of British Gas has announced plans to raise £750m from the sale of shares to pay off debts and protect its credit ratings in the process.
Centrica, which like rivals has come under pressure from the collapse in world energy costs, said it would be placing 350 million shares - equivalent to roughly 7% of its issued share capital.
The proceeds would also be used, the company said, to pay for two planned acquisitions including the previously announced £170m deal to buy Danish energy management firm, Neas Energy.
Centrica said £400m would go to trimming its net debt pile, last reported at £4.4bn.
Its share price fell more than 10% on the FTSE 100 after the surprise announcement was made, wiping £1.3bn from its market value.
