(Alliance News) - Oil major Royal Dutch Shell PLC on Tuesday said it expected to post an impairment charge in the first quarter due to the recent collapse in oil prices, but has seen minimal disruption from the coronavirus outbreak.
In an unscheduled update on Tuesday, Shell warned it expects to take post-tax impairment charges in a range of USD400 million to USD800 million in the first quarter, following a slump in oil prices caused by the Covid-19 pandemic and a price war between Russia and Saudi Arabia.
The Anglo-Dutch firm said the impairment guidance was based on changes to its oil price outlook for 2020.
Brent was quoted at USD27.10 a barrel Tuesday morning, up sharply from USD22.09 late Monday. The North Sea benchmark fell to USD21.65 overnight - its lowest level in 18 years.
Earlier this month, Shell suspended its share buyback in light of the coronavirus outbreak, but pledged not to cut its dividend. However, the company said Tuesday that disruption from Covid-19 has been minimal so far.
"The impact of the dynamically evolving business environment on first quarter results is being primarily reflected in March with a relatively minor impact in the first two months" of the year, Shell said.
In its Integrated Gas unit, first quarter production is expected to be between 920,000 and 970,000 barrels of oil equivalent per day. Shell said this includes the additional volumes from the Egypt offshore assets that were previously reported in its Upstream arm.
The Integrated Gas unit's trading results are expected to be in line with the fourth quarter 2019, Shell said.
In the Upstream division, first quarter production is expected to be between 2.65 billion and 2.72 billion barrels of oil equivalent per day.
Elsewhere, Shell said its financial liquidity remains strong and has a new USD12 billion revolving credit facility commitment.
The company will report first quarter earnings on April 30.
Shares in Shell 'A' and Shell 'B' were up 5.6% at 1,400.00 pence and 6.4% at 1,343.15p respectively on Tuesday in London.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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