* Income falls to $1.94 bln, in line with forecasts
* Reserves replacement ratio turns negative in 2015
* Capex came to $28.9 billion
* Sold $5.5 bln of assets in 2015
* Dividend held, yield above 8 pct
* Shares outperform sector, rising 6.2 pct
(Adds share price, CEO, CFO comments, details)
By Karolin Schaps and Ron Bousso
LONDON, Feb 4 (Reuters) - Royal Dutch Shell RDSa.L ,
Europe's largest oil company, reported its lowest annual income
in over a decade on Thursday and said it would take further
steps to cut costs to cope with weak oil prices if needed.
Shell, whose shareholders last week approved its takeover of
rival BG Group BG.L , said 2015 income fell 87 percent to $1.94
billion, in line with analysts' estimates, as its oil and gas
production unit took a big hit from slumping oil prices.
Shares in Shell, which offer a dividend yield of above 8
percent, were trading up 6.4 percent at 1036 GMT, outperforming
the European oil and gas company index which was up 3.4 percent.
"Most divisions came in towards the top end of management's
guidance range, which we view as positive," said Biraj
Borkhataria, equity analyst at RBC Capital Markets.
Shell's earnings are the latest demonstration of how badly
oil producers are suffering from a 75 percent fall in oil prices
since mid-2014. The world's largest oil company, ExxonMobil
XOM.N , this week reported its smallest quarterly profit in
more than a decade, while BP's 2015 loss was its biggest ever.
Norway's Statoil said on Thursday it would cut 2016 capital
expenditure (capex) by $1.7 billion year on year, while U.S.
producer ConocoPhilips reduced its quarterly dividend.
"Shell will take further impactful decisions to manage
through the oil price downturn, should conditions warrant that,"
Chief Executive Ben van Beurden said in a statement. Shell
maintained its annual dividend payment of $1.88 per share.
Shell is reducing investment, cutting nearly 10,000 jobs and
selling assets to cope with the downturn. The CEO told reporters
he believed oil prices had reached, or were near, the bottom of
the cycle, pointing to growing demand.
In order to lower spending, Shell has scrapped multi-billion
pound projects over the past year, including a controversial
exploration project in the Alaskan Arctic Sea, the Bab sour gas
field in Abu Dhabi and Carmon Creek oil sands project in Canada.
The company approved only four new projects last year and
investment decisions are expected to remain scarce in 2016.
This strategy has started to drag down Shell's reserve
replacement ratio, a metric used to reflect new reserves added
relative to the amount produced, which was negative in 2015 for
the first time in around 12 years.
"While we're not entirely comfortable with a negative
number, it's not the most important thing today," Shell Chief
Financial Officer Simon Henry told reporters.
He said the additions of BG's reserves once the takeover
completes would help.
Shell maintained its $33 billion combined Shell-BG capital
expenditure budget for 2016. Capital spending fell to $28.9
billion in 2015, down $8.4 billion year on year.
Shell's fourth-quarter current cost of supplies (CCS)
earnings excluding identified items, its preferred way of
measuring profits, fell 44 percent to $1.83 billion. Its
downstream business benefited from lower fuel prices,
contributing a profit of $1.5 billion in the fourth quarter.
Shell sold $5.5 billion worth of assets in 2015, it said.
(Editing by Jason Neely and Elaine Hardcastle)