Shell to write down $2.3 billion in Q4, sending share price lower
The oil and gas major told investors that it expects to write down up to $2.3 billion in its fourth quarter due to a weaker economic outlook, sending its share price lower on Friday.
Shell told investors on Friday that it expects to write down up to $2.3 billion in its fourth quarter (Q4) due to a weaker economic outlook.
The oil and gas major made the announcement in a trading update ahead of its FY results, with the company also downgrading its oil products sales forecast.
The announcement led to Shell’s shares closing 1.5% lower on Friday, with the stock down more than 4% on a year-to-date (YTD) basis.
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US-China trade war hurting oil demand
Earlier in the year, the company warned investors that trade tensions between the US and China could dampen demand for oil and impact its performance.
Shell said it expects impairment charges in a range between $1.7 billion and $2.3 billion for the quarter ‘based on the macro outlook’.
Shell is not the only company suffering as a result of the macroeconomic climate. Since October, Chevron, Equinor and Repsol have written down a total of approximately $20 billion due to lower long-term gas prices.
JP Morgan downgrades price target for Shell
Analysts at JP Morgan Cazenove reiterated their ‘overweight’ rating for Shell in December but downgraded their price target for the stock to £28.50.
Based on Shell closing at £22.32 a share on Friday, analysts at JP Morgan believe the stock has a potential upside of 27.6%.
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