Royal Dutch Shell to write down up to £17.90 billion of assets in the second quarter

Royal Dutch Shell to write down up to £17.90 billion of assets in the second quarter
Written by:
Wajeeh Khan
30th June, 10:05
Updated: 30th June, 10:09
  • Royal Dutch Shell to write down up to £17.90 billion of assets in the second quarter.
  • Shell is committed to reducing greenhouse gas emissions to net zero by 2050.
  • The oil and gas company forecasts a lower £28.48 per barrel for Brent Crude in 2020.

Royal Dutch Shell (LON: RDSA) downgraded its long-term forecast for oil and gas on Tuesday and said it will take a write-down of up to £17.90 billion in the second quarter. In mid-April, the Dutch-British company had revealed its commitment to minimising greenhouse gas emissions. By 2050, Shell had pledged to bring emissions to net-zero.  

Shares of the company are currently about 2% down on Tuesday. At £13 per share, Shell is more than 40% down year to date in the stock market after recovering from a low of £9.7 per share in March. Learn more about how to invest in the stock market.

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British Petroleum also expects write-downs in Q2

Owing to the ongoing Coronavirus pandemic and the associated slump in global oil prices, Shell told its investors that a meticulous review of several of its businesses had been conducted. In the second quarter, the oil major highlighted, its aggregate impairment charges after tax are expected to fall in the range of £12.20 billion to £17.90 billion. Shell’s board declared first quarter euro and pound sterling equivalent dividend payment in the first week of June.

According to Shell, it will write down the value of its integrated gas unit by £6.51 billion to £7.32 billion, upstream assets by £3.25 billion to £4.88 billion, and oil products by £2.44 billion to £5.70 billion. Earlier in June, the London-headquartered oil giant, British Petroleum, also estimated £11.88 billion to £15.99 billion of write-downs and non-cash impairment charges in the second quarter.

Shell lowers its forecast for Brent Crude

Shell previously had a forecast of £48.81 per barrel (average) for international benchmark Brent crude in 2020. The company downgraded its forecast to £28.48 per barrel (average) on Tuesday. The oil firm also lowered its forecast for Brent prices in the next two years from £48.81 per barrel to £32.53 per barrel now in 2021 and £40.68 per barrel in 2022.

Brent crude futures were reported exchanging hands at around £33.67 per barrel on Tuesday morning that represents a 0.7% decline. U.S. West Texas Intermediate futures, on the other hand, traded at £32.50 that translates to a broader over 0.8% decline.

Shell performed only slightly upbeat in the stock market last year with an annual gain of roughly 3%. At the time of writing, the Dutch-British oil and gas company has a market cap of £100.91 billion and a price to earnings ratio of 6.53.

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