Shell (RDSa) will write down close to $5 billion as a result of its decision to leave Russia, which is more than it had previously stated, but rising oil and gas prices stimulated trading activity in the first quarter.
The company’s earnings will be unaffected by post-tax depreciation of between $4 billion and $5 billion in the first quarter. Shell, which has a market capitalization of roughly $210 billion, previously stated that the Russia writedowns would total $3.4 billion.
The rise was due to extra possible repercussions in Russia related to contracts, receivables write-offs, and credit losses.
Shell’s stock was down 1.2 percent in early London trading.
The beginning of 2022 was one of the most volatile periods in the oil and gas business in decades. Following Moscow’s invasion of Ukraine, Western corporations such as Shell quickly walked out of Russia, terminating trading connections and winding down joint ventures.
The quarter’s LNG liquefaction volumes were somewhat higher, averaging 8 million tonnes. Shell will cease all operations in Russia, including a massive liquefied natural gas project on the Sakhalin Peninsula on the country’s eastern border.
Changes in the value of oil and gas stockpiles would have a very considerable negative impact on cash flow in the quarter, with outflows of roughly $7 billion.
Shell sold 4.3 million barrels per day on average in the third quarter, down from 4.45 million BPD the previous quarter.
The world’s largest LNG dealer forecasted stronger LNG trading earnings in the third quarter than in the previous three months. Shell gave no indication of how its stakes in Russian projects will be handled in the future.
In the third quarter, benchmark oil prices rose to just above $100 a barrel, the strongest since 2014, while European gas prices set a new high.
Even as concerns from America’s new sanctions on Russia kept traders and analysts on edge, European equities recovered from a selloff on Thursday, with healthcare firms surging to a new high.
London’s commodity special FTSE 100 index underperformed regional peers due to a drop in basic material and oil sectors.
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