Royal Dutch Shell, which is buying BG Group in the industry's largest deal in a decade, expects fourth-quarter profit to drop at least 42 per cent after the rout in crude prices deepened.

Profit adjusted for one-time items and inventory changes probably shrank to $1.6 billion to $1.9 billion, Shell said yesterday in a preliminary earnings statement. BG also published a provisional results statement that showed its 2015 oil and natural-gas production will probably beat forecasts. It expects full-year adjusted profit to be about 58 per cent lower.

Crude’s collapse below $28 a barrel has driven down Shell’s market value to the lowest in seven years and prompted concern it may be overpaying for BG’s production and cash flow.

Shell has cut staff and spending. Job losses at both companies in 2015 and 2016 will exceed 10,000. – (Bloomberg)