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30.06.2020 15:57 News >> Shell: Low Oil Prices To Lower Asset Value Up To $22B

Shell: Low Oil Prices To Lower Asset Value Up To $22B

Energy company points to impacts of COVID 19 and challenging commodity price environment.

Royal Dutch Shell announced Tuesday that the current low oil price environment could lower the value of its assets by up to $22 billion in the second quarter of 2020.
The Anglo-Dutch energy giant said it estimates the price of Brent crude oil to average $35 per barrel this year, and $40 a barrel next year, down significantly from the average of $64 per barrel in 2019.
"Given the impact of COVID-19 and the ongoing challenging commodity price environment, Shell is announcing today a revised long-term commodity price and margin outlook, which is expected to result in non-cash impairments in the second-quarter results," the firm said in a statement.
As a result, the company expects a write-down, a reduction in the estimated value of its assets, of up to $9 billion in integrated natural gas mostly in Australia, up to $6 billion in the upstream sector largely in North American and Brazilian shale plays, and up to $7 billion in oil products across its refining portfolio.
After oil prices started to plummet in March 2020 with the novel coronavirus (COVID-19), Shell posted a net loss and revenue decline in the first quarter.
In the January-March period of this year, the company's revenue fell 28.3% to $60 billion, from $83.7 billion in the same period of 2019, while the average price of Brent crude fell to $50 per barrel from $63 a barrel during that period.
Shell announced on April 16, 2020, that it targets to become a net-zero emissions energy business by 2050 or sooner, by reducing the carbon footprint of its energy products by around 30% up to 2035, and approximately 65% by 2050.
Although this ambitious goal aims to make Shell less reliant on oil and gas resources, it could become harder for the company to achieve it with a revenue decline.
Shell will release its second-quarter 2020 financial results on July 30.
Another oil giant - the UK's BP also announced on June 15 that it anticipates write-offs in the second quarter of 2020 in the range of $13 billion to $17.5 billion due to "... the prospect of the pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period." -



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