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Shell will reverse asset writedowns to the tune of $4.5 billion after it revised its oil and gas price outlook upwards, the supermajor said in a second-quarter financial update.
Shell now expects Brent crude to average $80 per barrel in 2023, $70 per barrel in 2024 and 2025, and $65 over the long term.
"Aggregate post-tax impairment reversals in the range of $3.5 to $4.5 billion of previously impaired assets are expected in the second quarter, primarily due to changes in commodity price outlook," the company said.
Shell also said it expected its second-quarter oil equivalent production at between 1.85 million bpd and 1.95 million bpd. It also reported an expected refining margin of $28.04 per barrel of crude, up significantly from $10.23 per barrel during the first quarter.
Shell reported its highest quarterly profit since 2008 from January to March this year, at $9.1 billion. This was up from $3.1 billion for the same period last year and up from $6.4 billion for Q4 2021. It's also above the analyst consensus of $8.7 billion provided by the firm before the release of the results in early May.
Shell took $3.9 billion of post-tax charges in this year's first quarter linked to its withdrawal from Russia, slightly down from the initial expectation of charges of between $4 billion and $5 billion.
As a result of the jump in profits, Shell raised its dividend for the first quarter by around 4 percent to $0.25 per share. The supermajor has completed $4 billion of its planned $8.5 billion share buyback program, expecting to complete the remaining $4.5 billion before the Q2 2022 results announcement.
Shell's stock price has soared by 35.2 percent over the last six months, Investment Week reported earlier this month, citing Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, as saying, "While the extremely accommodating environment in terms of the high oil price continues, Shell is likely to continue to reap rewards."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.