Royal dutch shell published forecast for Tuesday 2020 on Tuesday morning, warning that write off assets worth up to $ 22 billion and revise long-term energy price forecasts,
This is an update to the forecast for the second quarter of 2020, presented in the announcement of the results of the first quarter on April 30, 2020. The impacts presented here may differ from the actual results and are subject to refinement of the results of the second quarter of 2020.
Unless otherwise specified, the presented post-tax impacts are for profit based on the current value of supplies attributable to shareholders, with the exception of certain items.
Also, given the impact of COVID-19 and the ongoing difficult commodity price environmentShell continues to adapt to ensure business sustainability. In light of this, Shell announces today revised long term product price and margin forecast, which is expected to lead to a depreciation of non-cash assets in the second quarter. Details of perspective and deterioration provided later in this document. – Shell update for the second quarter of 2020
Based on these reviews, the aggregate post-tax impairment charges of $ 15 to $ 22 billion are expected in the second quarter, Impairment of impairment is recognized as an identified item, and no cash impact is expected in the second quarter. An approximate breakdown by segment is as follows:
Integrated gas $ 8–9 billion, mainly in Australia, including partial depreciation of QGC and Prelude assets
Production of $ 4-6 billion, mainly in the shales of Brazil and North America
Oil products from 3 to 7 billion dollars in the refining portfolio
– Shell update for the second quarter of 2020
Given the commodity crisis and the global economic downturn – Shell provides a revised forecast for spot Brent and NatGas:
Brent: US $ 35 per barrel (2020), US $ 40 per barrel (2021), US $ 50 per barrel (2022), US $ 60 per barrel (2023) and long-term US $ 60 (in real terms) until 2020)
Henry Hub: $ 1.75 / million BTUs (2020), $ 2.5 / million BTUs (2021 and 2022), 2.75 / million BTUs (2023) and long-term 3.0 US $ / million BTUs (in real terms by 2020)
Trading in Shell shares on Eurex on Tuesday fell by 2.54% after the news about the write-off.
Credit Suisse analyst Thomas Adolf said the company’s retirement in the second quarter was already expected, given market conditions. Adolf called the update a wake-up call.
“Although the revised volume guidance in absolute terms seems weak, it actually turned out to be better than the previous leadership in the second quarter,” he wrote.
Bloomberg Intelligence notes:
“However, improving operating performance when prices are low and tax effects go against you, unfortunately, do not give you very far,” says Bloomberg Intelligence. Shell’s depreciation of assets confirms BI’s view of the “historically weak quarter”.
RBC Capital Markets said the second quarter update was “much better” than the end of April:
“Lower assumptions about refining margins over time came as a big surprise than the lower short-term deck of oil and gas prices,” writes analyst Biraj Borhataria.
August Brent crude futures show that prices for the past 20 sessions over the past 20 sessions have stopped.
we noted Last week, much of the “recent optimism in the oil markets has made many analysts rack their brains for no real fundamental reason for changing sentiment.”