Carl Court | AFP | fake pictures
Oil giant Royal Dutch Shell reported a sharp net loss year-on-year on Thursday after an unprecedented period of turmoil in the energy market and significantly weaker oil and gas prices.
The Anglo-Dutch company reported that net income attributable to shareholders based on current cost of supplies (CCS) and excluding identified items, used as a proxy for net profit, had a loss of $ 18.3 billion for the second quarter 2020
That compares to net profit of $ 3.5 billion during the same period last year and $ 2.9 billion in the first three months of 2020.
Analysts warned that “Big Oil” companies, referring to the world’s largest energy companies, would likely report “horrendous” results in the second quarter, as the coronavirus blockade measures coincided with an unparalleled demand shock.
The continuing economic impact of the coronavirus pandemic had prompted Shell to announce that it expected to incur amortizations of up to $ 22 billion in the second quarter.
In a note to shareholders published on June 30, which came shortly after a similar announcement from its peer BP, Shell said it now anticipates a significant reduction in oil and gas prices in the next 30 years.
The bleak outlook for commodity prices until 2050 followed Shell’s decision to cut its shareholder dividend for the first time since World War II in the first quarter of the year.
The firm’s board of directors explained at the time that maintaining the current level of shareholder distribution “was not prudent,” reducing the dividend by almost two-thirds.
Shell now believes that Brent crude oil futures will average $ 35 a barrel in 2020, below a previous forecast of $ 60 for the international benchmark.
The company also lowered its Brent price forecast to $ 40 in 2021 and $ 50 in 2022, having previously said it expected prices to average $ 60 for each respective year.
Brent crude futures were trading at $ 43.71 a barrel Thursday morning, about 0.1% less, while western mid-US futures were at $ 41.22, 0.15% less.
Exxon Mobil and Chevron are expected to reveal their second-quarter earnings on Friday, while UK BP is set to report on August 4.
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