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Shell to write down as much as $22bn in wake of coronavirus

The decision also comes as the Anglo-Dutch company reviews its operations after CEO Ben van Beurden laid out plans in April to reduce greenhouse gas emissions to net zero by 2050.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Royal Dutch Shell on Tuesday said it will write $22 billion off the value of its assets after sharply lowering its oil and gas price outlook in the wake of the coronavirus pandemic.

The decision also comes as the Anglo-Dutch company reviews its operations after CEO Ben van Beurden laid out plans in April to reduce greenhouse gas emissions to net zero by 2050.

Shell, which has a market value of $126.5 billion, said in an update ahead of its second-quarter results on July 30 that it will take an aggregate post-tax impairment charge in the range of $15 to $22 billion in the quarter.

Shell's shares were down 0.4% in early trading.

The world's largest fuel retailer said it expects a 40% drop in fuel sales in the second quarter from a year earlier to 4 million barrels per day (bpd) due to a sharp fall in consumption due to coronavirus-related travel restrictions.

Upstream oil and gas production is expected to average 2.35 million bpd in the second quarter, down from 2.71 million bpd in the previous quarter.

Lower prices

Shell's writedown mirrors rival BP's move to take up to $17.5 billion off the value of its assets as it prepares to shift to low-carbon energy.

Royal Dutch Shell Plc B Shares

Sell: 1,265.80 | Buy: 1,266.80 nochange 0.00 (0.00%)
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Shell reduced its expected average benchmark Brent crude oil price for 2020 to $35 a barrel, down from $60. For 2021 and 2022 it cut its forecast to $40 and $50 a barrel, respectively, also down from $60.

Its long-term oil price outlook now stands at $60 a barrel, Shell said in an update ahead of its second-quarter results on July 30. It previously did not disclose its long-term value.

The company also cut its long-term refining profit margin outlook by 30%.

Its long-term natural gas price was set at $3 per million British Thermal Units.

BP cut its long-term Brent forecast to $55 a barrel from a previous $70.

(Reporting by Ron Bousso; editing by Jason Neely and Louise Heavens)


Copyright (2020) Thomson Reuters. This article was written by Ron Bousso from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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