Shell Hit Its Biggest Net Loss

December 31, 2015

Unlocking Word Meanings

Read the following words/expressions found in today’s article. 

1. incur / ɪnˈkɜr / (v.) – to receive or be exposed to something
Example: I incurred a penalty after failing to pay my taxes on time.

2. withdraw / wɪðˈdrɔ / (v.) – to remove from someone or something
Example: The shareholders plan to withdraw their investments from the company.

3. takeover / ˈteɪkˌoʊ vər / (n.) – the state in which a company is bought and controlled by another company
Example: The CEO’s attempt for a takeover of the popular social media company failed.

4. profitable / ˈprɒf ɪ tə bəl / (adj.) – able to bring in money
Example:  The airline quickly became profitable after hiring a popular actor for its ads.

5. portion / ˈpɔr ʃən / (n.) – a part or piece of something
Example: A small portion of the company’s sales goes to its chosen charity.


Read the text below.
Cancellation of major projects and a drop in oil prices caused Royal Dutch Shell to incur losses for this year’s third quarter.

The European oil giant, known more commonly as Shell, announced in October its biggest net loss for the past 16 years. The company reported that it cost them US$8.6 billion to discontinue big projects, such as drilling off the coast of Alaska and its heavy oil-sands project in Canada.

According to the company, the lack of operational facilities and the need to manage limited costs because of the recent decline in oil prices are the major reasons for withdrawing the projects. Shell’s chief executive Ben van Beurden said that these decisions were difficult yet critical for the company.

Next year, Shell’s takeover of British multinational oil and gas company BG Group will be completed. According to Van Beurden, this move can help Shell to focus on fewer but more profitable projects.

As of September 2015, Shell’s market value hit the lowest spot amid its ongoing deal with the BG Group. Shares of Shell experienced a 1.5% drop in the latter part of October 2015. The company is also one of the oil firms to announce plans to reduce investment towards the end of this year. Other oil companies that cut back on their spending include BP Global and Statoil.

Despite its huge losses and its move to cut back on spending, Shell will still give its shareholders their portion of the company’s profit.

Viewpoint Discussion

Enjoy a discussion with your tutor.  

Discussion A

·         Do you agree with Shell’s decision to discontinue some of their biggest projects? Why or why not?
·         Aside from focusing on smaller but more profitable projects, how else can Shell recover?

Discussion B

·         Is the oil and gas industry profitable in your country? Why or why not?
·         If you could invest in any industry in your country, what would it be? Why?

December 31, 2015