Royal Dutch Shell plc said Wednesday capital spending this year — following its combination with BG plc — would be about $33 billion, $2 billion less than in 2015 but 45% less for the combined companies’ spend in 2015. With the tie-up, about 10,000 staff and contractors are also expected to lose their jobs.

The updates to fourth quarter and full-year 2015 results were issued prior to Shell’s general meeting scheduled for Jan. 27, and also BG’s set for Jan. 28. Shell is scheduled to issue its quarterly results on Feb. 4. In December, the European oil major reduced the value of the BG merger by $17 billion, to $53 billion (see Daily GPI, Dec. 23, 2015).

Shell has “momentum…to reduce costs and to improve competitiveness,” CEO Ben van Beurden said. “Bold, strategic moves shape our industry. The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns.

“Shell’s drive to improve competitive performance is delivering at the bottom line. Operating costs have reduced by $4 billion, or around 10% in 2015, and the company expects Shell’s costs to fall again in 2016, by a further $3 billion. Synergies from the BG combination will be in addition to that.”

The job losses, he said, would be the result of streamlining and integration.

Shell also continues to take “impactful steps to refocus and reduce capital spending,” said the CEO. “Shell’s capital investment in 2015 is expected to be $29 billion, an $8 billion or over 20% reduction from 2014 levels. This has been delivered by efficiency improvements and more selectivity on new investments. Capital investment for Shell and BG combined in 2016 is currently expected to be $33 billion, around a 45% reduction from combined spending, which peaked in 2013.”

He noted that “flexibility for further reductions is available and will be utilized should conditions warrant that.” Asset sales between 2014 and 2015 now exceed $20 billion, “well above the original plan of $15 billion set out in early 2014. Preparations are well advanced for $30 billion of asset sales in 2016-2018, assuming the successful completion of the combination.”

In addition to the asset sales, Shell has made impactful decisions, he said, to reduce longer term, low return upstream positions, including its exit from Alaska exploration “for the foreseeable future,” as well as canceling the Carmon Creek heavy oil project in Canada (see Daily GPI, Oct. 29, 2015; Sept. 28, 2015). In addition, Shell has exited “from shales positions in multiple countries.”

Fourth quarter earnings on a current cost of supplies (CCS) basis, similar to U.S. net earnings, are forecast to be $1.6-1.9 billion. Upstream profits are estimated at $400-500 million, with Integrated Gas profits of $1.6-1.9 billion and downstream earnings of $1.4-1.6 billion. Full-year 2015 earnings on a CCS basis, excluding one-time items, are expected to be $10.4-10.7 billion.

Shell earned $4.16 billion in 4Q2014, and for 2014, profits were $19.04 billion (see Daily GPI, Jan. 29, 2015).

A net charge of $200 million is anticipated in the final quarter to reflect gains on asset sales and price-related impairments, with charges for the full year estimated at $6.8-7 billion net. Income is expected to be $600 million to $1 billion in 4Q2015, with full-year income of $1.6-2.0 billion. Cash flow from operating activities in 4Q2015 should be $4.8-6.0 billion, with full-year cash flow estimated at $29.2-30.4 billion.

Oil and natural gas production in the last three months of 2015 is estimated at 3.0 million boe/d, with full-year output averaging 2.9 million boe/d. Gearing, a measure of financial leverage showing the extent to which Shell’s operations are funded by lenders versus shareholders, is expected to be 14% at the end of 2015, including net debt of $27 billion, versus 12.2% at the end of 2014 and 12.7% at the end of 3Q2015.

Shell remains committed to its dividends, which for 2015 are expected to be $1.88/share or $12 billion, and for 2016 “at least” $1.88/share or, assuming successful completion with BG, $15 billion in total.