Shell to write down assets, taking cuts to more than $22 B
Reuters - Shell said it will write down the value of oil and gas assets by $3.5 B to $4.5 B, following a string of impairments this year as it adjusts to a weaker outlook.
In an update ahead of its fourth quarter results on February 4, Shell said the post-tax charge was due in part to impairments on its Appomattox field in the U.S. Gulf of Mexico, the closure of refineries and LNG contracts.
It said some charges involved in its restructuring would be recognized in 2021.
Shell shares were down by around 4% in early trading in London.
In October, Shell, the world's biggest LNG trader, wrote down the value of its LNG portfolio by just under $1 billion, focusing on its flagship Prelude project in Australia.
That followed a $16.8 billion write down in the second quarter which also included Prelude and a sharp cut in its price outlook.
On February 11, 2021, Shell CEO Ben van Beurden will unveil the company's long-term strategy to sharply reduce its greenhouse gas emissions and expand its low-carbon energy and power businesses.
In its update, the Anglo-Dutch company also said it expects oil and gas production in its upstream division to be around 2.275 to 2.350 MMbpd, slightly higher than in the third quarter.
Production was impacted by the closure of platforms in the Gulf of Mexico due to hurricanes as well as mild weather in Northern Europe.
LNG liquefaction volumes are expected to be between 8 and 8.6 MM metric t.
Oil refinery utilization is expected to be between 72% and 76% of capacity in the quarter, reflecting continued weak demand due to the coronavirus pandemic.
Shell, the world's largest retailer, said its fuel sales were expected to be in a range of 4 to 5 MMbpd, roughly similar to the third quarter.
Record profits from its marketing business, which includes over 45,000 petrol stations, strongly boosted Shell's third-quarter results. The company said, however, that its fourth-quarter marketing results were expected to be "significantly lower" than the previous quarter.
Oil and gas trading profits were also set to decline sharply in the fourth quarter from the third quarter, it said.
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