Oil major Shell says it is writing down the value of its assets by up to $22 billion as it adjusts to oil’s historic crash in recent months.
Shell said it expects oil prices to level at $50 a barrel in 2022, versus an initial prediction of $60 a barrel.
Earlier this month, oil major BP slashed its valution by almost $18 billion.
Oil prices tumbled in March due to a price-war between Saudi Arabia and Russia, and fell further thanks to a lack of demand due to COVID-19.
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Oil major Shell will slash up to $22 billion of the value of its assets as the company copes with falling oil prices.
In a second quarter update, the oil major said on Tuesday: “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.”
Shell said aggregate post-tax impairment charges in the range of $15 to $22 billion are expected in the second quarter.
This is the breakdown of the write-downs Shell expects:
Integrated Gas: $8-9 billion.
Upstream: $4-$6 billion
Oil Products: $3-$7 billion across the refining portfolio.
Earlier this month, oil major BP slashed its valuation by almost $18 billion as it adjusts to oil’s pandemic era new normal.
BP said its transformed price outlook is based on the likelihood of a global transition toward carbon-efficient fuels leading to a “Paris-consistent world” — referencing the Paris climate agreement — and the ongoing impact of the pandemic.
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Shell said it now expects oil prices to level …read more
Source:: Business Insider