Shell to Book $400-800mn in Q1 Charges
Shell warned on March 31 it expected to book between $400mn and $800mn in post-tax impairment charges in its first quarter results because of a weaker oil price outlook in 2020.
The company's integrated gas production is expected to average between 920,000 and 970,00 barrels of oil equivalent/day, it said, versus a forecast of 950,000-980,000 boe/d made on January 30. Its LNG liquefaction supply is now predicted to range between 8.8mn and 9.2mn mt, compared with a previous guidance of 9.0-9.5mn mt.
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Shell anticipates upstream production averaging 2.65-2.72mn boe/d, against an earlier forecast 2.625-2.775mn boe/d.
Downstream, refinery utilisation is expected at 80-84%, with availability of 93-96%. Refining margins are predicted to be weaker than in the fourth quarter. Chemical plant utilisation is seen at 82-87%, with availability of 94-97%.
There is significant uncertainty with macro-economic conditions regarding prices and demand for oil because of the Covid-19 pandemic, Shell said. But the company said its liquidity was still strong and that it had a new $12bn revolving credit facility commitment. This and its $20bn in cash and cash equivalents mean that Shell's available liquidity will rise to more than $40bn.
Shell announced on March 30 that it was withdrawing from the 16.45mn mt/yr Lake Charles LNG project in Louisiana, citing current market conditions.