* Shell guides to weaker downstream margins
* Maintains capex at lower end of $24-$29 bln range
* Writedowns follow several other oil majors
(Recasts, updates throughout)
By Ron Bousso and Pushkala Aripaka
Dec 20 (Reuters) - Royal Dutch Shell said on Friday
it expects to write down up to $2.3 billion in the fourth
quarter, the latest major energy company forced to shrink
estimates for sector values due to a weaker economic outlook.
In a trading update ahead of full year results, Shell also
said it expected weaker margins in its refining, trading and
marketing division while maintaining spending on the lower end
of forecasts amid slowing demand for oil and gas.
The Anglo-Dutch company warned in October that trade
tensions between the United States and China, the world's two
largest energy consumers, could hurt demand and take a toll on
its performance.
Shell said it expects to take post-tax impairment charges in
a range between $1.7 billion and $2.3 billion for the quarter
"based on the macro outlook". It did not say which assets the
impairments relate to.
Since October, rivals Chevron, BP, Equinor
and Spain's Repsol all wrote down a total of
around $20 billion, primarily in U.S. shale gas assets due to
lower long-term gas prices.
The impairment will likely increase Shell's debt ratio, or
gearing, which the company has struggled to reduce in recent
years.
"This reduction in guidance and impairment appears to show
that management underestimated how much weaker oil prices would
be in the latter part of this year, as well as underestimating
future demand for oil, along with its by-products," said Michael
Hewson, chief market Analyst at CMC Markets UK.
Its shares were down 0.9% by 1000 GMT, compared with slight
gains on the broader European energy index.
Shell, which had beaten third-quarter profit expectations on
strong oil and gas trading, also warned that higher taxes would
hit earnings by about $500 million to $600 million in the fourth
quarter.
The company added that it expects additional well write-offs
in the range of $100 million to $200 million in the period,
while 2019 capital expenditure is expected to be at the lower
end of its guidance range of $24 billion to $29 billion.
Production of oil and gas is expected to be higher from the
third quarter while liquefied natural gas (LNG) volumes are in
line with previous forecasts at between 8.8 and 9.4 million
tonnes.
Shell reports fourth quarter results on Jan. 30, 2020.
(Reporting by Pushkala Aripaka in Bengaluru; Editing by
Saumyadeb Chakrabarty and Emelia Sithole-Matarise)
