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By Bloomberg

Royal Dutch Shell Plc, the oil producer buying BG Group Plc for $70 billion, reported a 56 percent decline in first-quarter profit after crude prices slumped.

Profit adjusted for one-time items and inventory changes dropped to $3.2 billion from $7.3 billion a year earlier, The Hague-based Shell said Thursday in a statement. That beat the $2.5 billion average estimate of 12 analysts surveyed by Bloomberg, as the refining and trading business offset some of the drop in prices.

Oil’s slump over the past year has forced producers to reduce spending and defer projects to strengthen their balance sheets. Volatile prices can boost earnings from oil trading, while falling crude cuts costs for refineries.

“Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices,” Shell Chief Executive Officer Ben Van Beurden said in the statement. “We continue to take steps to further improve competitive performance by redoubling our efforts to drive a sharper focus on the bottom line in Shell.”

Average Brent crude prices fell 49 percent in the quarter from a year earlier to $55.13 a barrel. The benchmark has recovered this month, rising to about $65 a barrel as violence in the Middle East stoked supply concerns.

Shell expects oil prices to rise to $90 a barrel by 2018, justifying the 50 percent premium it bid to buy BG, according to an April 8 statement.

The Anglo-Dutch company together with BP Plc and Total SA are the biggest oil traders, handling enough fuel every day to meet the needs of Japan, India, Germany, France, Italy, Spain and the Netherlands. The bear market has allowed them to generate higher returns by storing cheap oil to sell at a profit later and using lower prices to make bets with the same capital.

The BG acquisition, to be completed by early next year, will give Shell deepwater assets in Brazil, consolidate its position in Australia’s gas industry and allow greater participation in the U.S.’s emerging LNG export industry.

Van Beurden accelerated asset sales and reduced spending even before oil started to tumble last June. Shell axed a $6.5 billion petrochemicals plant in Qatar and said in January it will cut $15 billion of investments over the next three years and curtail exploration.