. . Press "Enter" to skip to content

Shell posts $18.4bn loss, writes down Nigerian oil block

Royal Dutch Shell said on Thursday that it posted a loss of $18.4bn in the second quarter of this year, compared to a profit of $3.5bn in the same period of 2019.

The oil major said its Q2 write-downs included the Oil Prospecting Licence 245 for an offshore oil block in Nigeria which it holds alongside Eni and which is at the centre of an ongoing corruption court case in Italy.

A write-down is a reduction in the estimated or nominal value of an asset.

Italian prosecutors have asked for oil majors Eni and Shell to be fined and some of their present and former executives, including Eni Chief Executive Officer, Claudio Descalzi, to be jailed in a long-running trial over alleged corruption in Nigeria. All the defendants have denied any wrongdoing.

Shell said a post-tax impairment charge of $4.658bn was “mainly related to unconventional assets in North America, assets offshore in Brazil and Europe, a project in Nigeria and an asset in the U.S. Gulf of Mexico,” according to Reuters.

The company warned that the outlook for oil demand continued to be uncertain and that its integrated gas unit faced a greater financial hit in Q3 due to a lag in the impact of oil prices on oil-linked contracts

The CEO, Ben van Beurden, said the company had the option to maintain its capital expenditure cuts this year into future years if necessary.

He noted that the company had cut its exploration drilling plans for this year from 77 wells to 22.

Shell cut its capital spending budget for this year in March from around $25bn to $20bn.

The company’s debt gearing ratio rose to 32.7 per cent at the end of the first half of 2020, up from 28.9 per cent at the end of Q1 and 27.6 per cent at the end of June 2019.

Van Beurden said the company had generated $2.6bn of cash flow from operations in Q2, down from $11bn a year earlier.

“Shell has delivered a resilient cash flow in a remarkably challenging environment,” he said.


 65 total views,  1 views today

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *