Shell sinks to loss as write-downs stack up
North Sea oil giant Shell took a loss in the second quarter of the year after being forced to write down the value of the oil in its fields.
The group said CCS earnings attributable to shareholders swung to an $18.4 billion (£14.2bn) loss in the second quarter of the year, from $3bn in the same period last year.
However, when stripping out the one-off charges the company made a small profit, ahead of what analysts had expected.
Last month, Shell revealed that it would take a writedown which could reach up to $22bn in the second quarter. Yesterday, it revealed an impairment charge of $16.8bn.
The impairment, Shell said, came “as a result of revised medium- and long-term price and refining margin outlook assumptions in response to the Covid-19 pandemic and macroeconomic conditions as well as energy market demand and supply fundamentals”.
When stripping out the effects of this impairment, the adjusted earnings were $638m across the quarter. It was ahead of the $700m loss analysts had been expecting.
Chief executive Ben van Beurden said: “Shell has delivered resilient cash flow in a remarkably challenging environment.”
Stuart Lamont, investment manager at Brewin Dolphin, said: “Inevitably, the biggest talking point in this morning’s results from Royal Dutch Shell is the huge loss the company has incurred – largely as a result of revised pricing. It is an indication of just how serious the impact of Covid-19 has been on businesses, particularly in the oil and gas sector.”