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Shell defending BUSINESS A25
BG deal in time Wednesday 4 November
of low oil prices
US factory orders slip in month of September
DANICA KIRKA
Associated Press M. CRUTSINGER egory that serves as a American products less Demand for all durable
LONDON (AP) — Royal AP Economics Writer proxy for business invest- goods, items expected to
Dutch Shell outlined Tues- WASHINGTON (AP) — Or- ment spending slipped 0.1 competitive overseas. last at least three years, fell
day its strategy for making ders to U.S. factories fell in percent. The September 1.2 percent. Demand for
its merger with BG profit- September for a second result was led by a big 36 Weak economies in China nondurable goods such as
able in a world with falling straight month, with a key percent fall in the volatile paper, chemicals and food
oil prices, revealing anoth- category that tracks busi- category of commercial and other key foreign mar- fell 0.8 percent.
er $1 billion in cost savings ness spending plans also aircraft. But the weakness Economic growth as mea-
from the deal. losing ground. was widespread across kets have also cut into ex- sured by the gross domestic
Chief Executive Officer Ben Factory orders dropped other categories including product slowed to a mod-
van Beurden said cost sav- 1 percent in September primary metals, machinery ports. Orders for motor ve- erate 1.5 percent rate in
ings for the deal are now following a 2.1 percent and computers. the July-September quarter
expected to be $2 billion, decline in August, the U.S. manufacturers have hicles and parts edged up following a 3.9 percent ad-
bringing total synergies Commerce Department been squeezed this year vance in the second quar-
to $3.5 billion in 2018. Ex- reported Tuesday. A cat- as a strong dollar makes a modest 0.4 percent, but ter. q
amples include savings on
corporate costs such as demand in transportation
real estate.
“The $1 billion increase is overall was off 3.1 percent.
in operating cost syner-
gies and has arisen from Outside the volatile trans-
both de-risking our original
assumptions but also from portation sectors, orders
identifying further opportu-
nities,” he told reporters on were down 1.4 percent,
a conference call. “Plans
also call for $1.5 billion of the fifth drop in the past six
synergies for the combined
exploration portfolio in months.
2018.”
Shell agreed to buy British Freddie Mac posts $475M 3Q loss; no dividend pay
rival BG Group for 47 bil-
lion pounds ($69.7 billion) This photo shows the Freddie Mac corporate office in McLean, Va. Freddie Mac reported quarterly as reflected in accounting.
in April, in a deal widely financial results on Tuesday, Nov. 3, 2015. “Freddie Mac continues to
seen as an effort by the fulfill its obligations to sup-
energy company to adapt (AP Photo/Pablo Martinez Monsivais) port the housing finance
to lower prices. The deal market, and provide liquid-
will boost Shell’s oil and gas MARCY GORDON $96.5 billion in dividends, agency that oversees Fan- ity and access to mort-
reserves by 25 percent and AP Business Writer exceeding its government nie and Freddie raised the gage credit,” Watt said.
give it a bigger presence in WASHINGTON (AP) — Mort- bailout of $71 billion. possibility that future quar- Freddie and Fannie own
the fast-growing liquefied gage giant Freddie Mac The government rescued terly losses could mean or guarantee about half of
natural gas market. reported a $475 million net Freddie and larger sibling they would have to receive all U.S. mortgages, worth
Companies were once loss for the third quarter Fannie Mae at the height further government aid. about $5 trillion. Along with
accustomed to oil at $100 due to losses it sustained of the financial crisis in Sep- Volatile interest rates and other federal agencies,
a barrel or more. But oil on the investments it uses tember 2008, after they suf- reduced capital cushions they back roughly 90 per-
dropped to a six-year low to hedge against swings in fered huge losses from risky for the two companies, un- cent of new home loans.
in August as Brent crude, interest rates. mortgages in the housing der their agreements with The two companies don’t
the benchmark for North The government-controlled market bust. the government, “will likely directly make loans to bor-
Sea oil, averaged $50.26 a company said Tuesday the Together the two compa- make both enterprises in- rowers. They buy mortgag-
barrel in the third quarter, July-through-September nies received taxpayer aid creasingly susceptible to es from lenders, package
down 51 percent from a loss mainly reflected ac- totaling about $187 billion. the possibility of quarterly them as bonds, guarantee
year earlier. counting measures, while The housing market’s grad- losses that could result in them against default and
The price of oil was about its business was strong and ual recovery has made draws” from the Treasury, sell them to investors. That
$58 a barrel on the day the continued to improve. The Freddie and Fannie profit- Mel Watt, director of the helps make loans avail-
deal was announced. loss compared with net in- able again. Federal Housing Finance able.
Van Beurden said only the come of $2.1 billion in the At the same time, the com- Agency, said in a state- Freddie’s third-quarter loss
most competitive projects same period of 2014. It panies have been whittling ment Tuesday. was attributed largely to
would go ahead and that broke a streak of 15 straight down their mortgage hold- Watt noted that Freddie’s accounting losses from
Shell was planning for a profitable quarters. ings and transferring risky third-quarter loss wasn’t derivatives, financial trans-
prolonged downturn. The company, based in loans to the private market, due to a deteriorating risk actions that the company
“We are reshaping the McLean, Virginia, won’t away from taxpayers — a profile of mortgages or an uses to hedge against
company and this will ac- pay a dividend to the U.S. trend that is likely to reduce increase in losses related to swings in interest rates.
celerate once the trans- Treasury next month. Fred- their revenue. repayment risk, but rather Freddie reported deriva-
action is completed,” Van die previously has paid The head of the federal to volatility in interest rates tives losses of $4.2 billion in
Beurden said. the July-September quar-
The boards of both com- ter, widened from about
panies had recommended $600 million a year earlier.
that shareholders approve A plan to phase out Fannie
the deal.q and Freddie and instead
use mainly private insurers
to backstop home loans
advanced in the Senate
last year and was endorsed
by the White House. The
plan would create a new
government insurance
fund. Investors would pay
fees in exchange for insur-
ance on mortgage securi-
ties they buy, and the gov-
ernment would become a
last-resort loan guarantor.
No work on the proposal
has been done this year in
the current Congress.q
