Oil giant Shell stung by £1.8bn hit to the books as it’s forced to write down the value of some assets
- Shell also trimmed back its forecast for quarterly oil production
- Oil and gas companies have had to write down the value of US shale assets
- Shares in the oil firm fell 1 per cent following the news to 2,247p
Anglo-Dutch oil giant Shell has said it expects to be hit by an impairment charge of up to $2.3billion (£1.8 billion) for the year.
In a trading update on Friday, it also marginally trimmed back its forecast for quarterly oil production sales and said it has seen ‘marginally lower’ margins in it chemicals business.
Shell did not disclose the specific cause of the impairment, although it comes after oil and gas rivals including BP and Chevron have written down billions of dollars-worth of shale assets in recent months.
Oil giant Shell has been hit by an impairment charge of up to £1.8 billion
The company also said its 2019 cash capital expenditure is expected to be at the lower end of its forecasts, having predicted a range of $24billion to $29billion (£18.4 billion to £22.2 billion).
In a statement ahead of its fourth-quarter earnings, the oil firm said it expects upstream production to be around 2.8 million barrels a day.
Meanwhile, it said it expects downstream oil product sales volumes of between 6.5 million and 7 million barrels a day.
The firm previously said it expected production to be between 6.65 million and 7.05 million barrels per day.
Integrated gas production is expected to be between 920,000 and 970,000 barrels of oil equivalent a day, Shell added.
The company also said it expects margins to be lower in the most recent period due to season due to seasonal trends.
Michael Hewson, chief market analyst at CMC Markets UK, said: ‘This reduction in guidance and impairment appears to show that management under-estimated how much weaker oil prices would be in the latter part of this year, as well as under-estimating future demand for oil, along with its by-products.’
‘At a time when renewables are starting to become more mainstream, this warning does raise questions as to whether management are sufficiently attuned to the changing global environment around energy and climate change.’
The energy firm said it will publish its full figures for the fourth quarter on 30 January.