Anglo-Dutch energy major Royal Dutch Shell posted a colossal net loss of USD18.1 billion for the second quarter, blaming massive asset writedowns on the coronavirus-hit oil market, and flagged that job cuts are on the way.
The performance, contrasting sharply with profit after tax of USD3 billion a year earlier, was sparked by a huge USD16.8-billion charge on chronic fallout both from COVID-19 and collapsing oil prices.
The vast charge was taken “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,” Shell said in a results statement.
The dire performance meanwhile reflected lower prices for oil, liquefied natural gas (LNG) and gas, while it was also adversely impacted by lower refining margins and oil products sales volumes.
Production dipped six percent to 3.4 million barrels of oil equivalent per day in the reporting period – and is forecast to drop further in the third quarter.
Shell had forecast in June that it would face a charge of between USD15 billion and USD22 billion in the second quarter after crude futures had suffered a spectacular crash on COVID-19 fallout, the Saudi-Russia price war and oversupply.
Both Shell and British rival BP, which reports its earnings next week, have opted to book charges in the second quarter on sustained coronavirus fallout that ravaged the world’s appetite for crude oil.
Shell had already plunged into the red in the first quarter of the oil price crash, which prompted it to cut its shareholder dividend for the first time since the 1940s.
