Shell takes $2bn hit amid slowing demand for oil
Oil giant Royal Dutch Shell has said it expects impairment charges of up to $2.3bn (£1.8bn) in the fourth quarter and has trimmed its output estimates due to a weaker economic outlook.
In a trading update issues ahead of its full year results in January, Shell said it expected “materially lower” margins in its refining, trading and marketing divisions.
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Shell said it would keep spending at the lower end of forecasts amid slowing global demand for oil and gas.
The Anglo-Dutch energy giant had warned in October that trade tensions between the US and China could dent demand and impact its performance.
In today’s update, Shell said it now expects to take post-tax impairment charges between $1.7bn and $2.3bn for the fourth quarter “based on the macro outlook”.
The company did not specify which assets the impairments relate to.
Shell also said it expects 6.5m barrels of oil equivalent per day (boepd) to 7m for the fourth quarter, down on earlier estimates of 6.65m to 7.05m boepd.
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“This reduction in guidance and impairment appears to show that management underestimated how much weaker oil prices would be in the latter part of this year, as well as underestimating future demand for oil, along with its by-products,” said CMC Markets analyst Michael Hewson.
Shell’s ‘B’ shares were down 1.25 per cent by lunchtime.