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Shell releases 2Q20 outlook update

Published by , Editor
LNG Industry,

Shell has issued an update to its 2Q20 outlook, which was originally distributed in the company’s 1Q20 results announcement on 30 April 2020.

The details provided in the update regarding Shell’s integrated gas business are as follows:

  • Production is expected to be between 880 000 and 910 000 boe/d.
  • LNG liquefaction volumes are expected to be between 8.1 million t and 8.5 million t.
  • Additional well write-offs in the range of US$250 million to Us$350 million are expected compared with 2Q19. No cash impact is expected in 2Q20.
  • Deferred tax charges are expected to have a negative impact on earnings in the range of US$100 to US$200 million. No cash impact is expected in 2Q20.
  • Trading and optimisation results are expected to be below average.
  • More than 90% of Shell’s term contracts for LNG sales in 2019 were oil price linked with a price-lag of typically 3 - 6 months. Consequently, the impact of lower oil prices on LNG margins became more prominent from June onwards.
  • CFFO in Integrated Gas can be impacted by margining resulting from movements in the forward commodity curves. Margining inflows are not expected to be significantly different from those received in 1Q20.

The following statement was also included in the update:

“Given the impact of COVID-19 and the ongoing challenging commodity price environment, Shell continues to adapt to ensure [its] business remains resilient. In light of this, Shell is announcing today a revised long-term commodity price and margin outlook, which is expected to result in non-cash impairments in the second quarter results.”

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