Shell plans to reverse billions in writedowns on account of increasing oil prices
Shell has disclosed a reversal of between USD3.5 billion and USD4.5 billion on previous writedowns in response to soaring oil and gas prices. According to a company statement, “In the second quarter 2022, Shell has revised its mid- and long-term oil and gas commodity prices after reflecting on the current macroeconomic environment as well as updated energy market demand and supply fundamentals.”
Shell is now assuming hiked up Brent crude prices of USD80 per barrel in 2023 and USD70 per barrel in 2024 and 2025, as well as a longer-term assumption of USD65 per barrel – previous assumptions were USD60 per barrel for 2023, 2024 and 2025.
The UK supermajor has booked billions of dollars in impairments starting in 2020 as the pandemic strained global economic activity; commodity prices then surged post-pandemic compounded by Russia’s invasion of Ukraine in February, which prompted Western sanctions.
However, Shell recorded its biggest ever profit for a single quarter in the first three months of the year with adjusted earnings of up to USD9.1 billion, compared with USD3.2 billion in the first quarter of 2021 and USD6.4 billion in the fourth quarter of that year.
Shell said second-quarter production is expected to increase to 2.93 million barrels of oil equivalent per day following field maintenance efforts.
The company also said it completed a share buyback programme of USD8.5 billion in the three months to the end of June.
