Royal Dutch Shell avoided its first quarterly loss in recent history, helped by a booming trading business, but announced nearly $17 billion in impairment charges reflecting a pessimistic outlook for oil and gas prices.
Shell had warned last month it was set to slash the value of its oil and gas assets by up to $22 billion as the coronavirus crisis hollowed out energy demand.
“Shell has delivered resilient cash flow in a remarkably challenging environment,” CEO Ben van Beurden said in a statement on Thursday.
The Anglo-Dutch company warned, however, of the continued impact of the pandemic on oil and natural gas prices and sales in the third quarter.
Shell and its peers have historically weathered downturns thanks to their large refining operations, whose profit margins are boosted by lower crude oil prices and stronger fuel demand.
But in this crisis, the drop in oil and gas prices was coupled with an unprecedented drop in global demand.
Shell has responded by cutting its dividend for the first time since World War Two and cutting planned spending by $5 billion to a maximum of $20 billion this year.
It booked an overall impairment charge of $16.8 billion in the quarter after lowering its short-term oil and gas price outlook in the wake of the epidemic. The charge is at the lower end of its previous guidance.
Shell’s shares were up 0.2% in early trading.
Source: Reuters
