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Shell to lose $22 billion due to the pandemic

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
Though oil prices are up, the companies can’t shake off the previous losses.

If in mid-June, BP announced that due to the pandemic, it has to write down the value of the assets, now another major Oil company will do the same. The Royal Dutch Shell said yesterday that it would slash the value of oil and gas assets by as much as $22 billion as the pandemic hit hard the oil demand and, therefore, its price. It made oil cost less than $20 compared to $66 at the beginning of the year.

But assets underwriting is not the first move made by Shell. In April, it cut its dividends by two thirds for the first time since World War II, and it announced that it would go emission-free by 2050.

Although Oil trades now at over $40/ barrel, Shell's expectation is not that bright. It expects the price to settle at $35 this year, while it sees it at $60 per barrel in the long term.  

Both Shell, and its rival BP, are making steps into transitioning to clean energy. Still, according to specialists, the debt will be more significant than the assets underwriting in Shell's case. But, in the grand scheme of it all, the future of oil and fossil fuels depends on whether governments will take into consideration the generic fuels to rebuild the global economy or invest in green energy based on the Paris climate agreement.

More will be announced when the company will release the financial report for the second quarter of 2020. The stock price was lower by 2.4% in early trading yesterday. 

Read more about it on CAPEX.com!

Sources: bbc.com, reuters.com


This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.