Shell to Take Impairment Hit of Up to $2.0 Billion — Update
By Christian Moess Laursen
Shell expects to book up to $2 billion in post-tax impairments, denting second-quarter profits, while trading in its core gas division is set to fall on quarter.
The British energy giant said Friday that it expects to book an impairment after tax of between $1.5 billion and $2.0 billion due to halting construction of its biofuels facility in Rotterdam, Netherlands, announced on Wednesday, as well as the divestment of its chemicals plant in Singapore.
In addition, Europe's largest energy company expects trading results from its core integrated-gas segment to be lower than in the first quarter, when the unit booked $3.68 billion in adjusted earnings, due to seasonality.
However, it expects the unit's results to match those of the second quarter last year, when it booked $2.5 billion in adjusted earnings--a metric that strips certain commodity price adjustments and one-time charges.
It also narrowed the segment's liquids and natural-gas production outlook slightly upward to 940,000 to 980,000 oil-equivalent barrels a day for the quarter, from its previously guided range of 920,000 to 980,000 BOE a day, ahead of its results announcement next month.
Shell, the world's largest liquefied natural-gas trader, expects its quarterly LNG volumes to be between 6.8 million and 7.2 million metric tons, compared with the prior-year's 7.2 million tons.
This would mean a decline from the first quarter's 7.6 million tons. However, gas prices in Europe have rallied in recent months on strong demand in Asia amid heat waves and outages limiting supply, potentially providing a boon to Shell's quarterly results.
On the upstream side--the extraction of crude oil and natural gas--Shell is expecting the unit to produce between 1.72 million and 1.82 million BOE a day ready for sale, versus 1.70 million a year prior and 1.87 million in the first quarter. In the first quarter, the segment garnered $1.93 billion in adjusted earnings.
Additionally, the FTSE 100-listed company said its quarterly trading results from both the chemicals and products segment and its marketing segment--which includes electric-vehicle charging, wholesale commercial fuels and lubricants businesses--are expected to be in line with first-quarter results.
Its quarterly results are scheduled to be published on Aug. 1.
Write to Christian Moess Laursen at christian.moess@wsj.com
(END) Dow Jones Newswires
July 05, 2024 02:48 ET (06:48 GMT)
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