Shell has indicated that it will reverse asset write-downs to the tune of $4.5 billion after it revised its oil and gas price outlook upwards.
In its second-quarter financial update released yesterday, the multinational said it expects Brent crude to average $80 per barrel in 2023, $70 per barrel in 2024 and 2025, and $65 over the long term.
“Aggregate post-tax impairment reversals in the range of $3.5 to $4.5 billion of previously impaired assets are expected in the second quarter, primarily due to changes in commodity price outlook,” the company said.
Shell also said it expected its second-quarter oil equivalent production at between 1.85 million bpd and 1.95 million bpd. It also reported an expected refining margin of $28.04 per barrel of crude, up significantly from $10.23 per barrel during the first quarter.
Shell reported its highest quarterly profit since 2008 from January to March this year, at $9.1 billion. This was up from $3.1 billion for the same period last year and up from $6.4 billion for Q4 2021. It’s also above the analyst consensus of $8.7 billion provided by the firm before the release of the results in early May.
The company took $3.9 billion of post-tax charges in this year’s first quarter linked to its withdrawal from Russia, slightly down from the initial expectation of charges of between $4 billion and $5 billion.
Shell raised its dividend for the first quarter by around 4 percent to $0.25 per share. The supermajor has completed $4 billion of its planned $8.5 billion share buyback program, expecting to complete the remaining $4.5 billion before the Q2 2022 results announcement.
Also, Shell’s stock price has soared by 35.2 percent over the last six months, Investment Week reported earlier this month, citing Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, as saying, “While the extremely accommodating environment in terms of the high oil price continues, Shell is likely to continue to reap rewards.”
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