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    Shell Earnings Tumble in Q2, But Trading Offers Bright Spot


The company's net income was negative, owing to $16.8bn in impairments booked to reflect a weaker price outlook.

by: Joseph Murphy

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Shell Earnings Tumble in Q2, But Trading Offers Bright Spot

Shell generated $638mn in second-quarter adjusted earnings, down 82% from $3.46bn a year earlier, it said on July 30, blaming the result on weaker prices for oil and gas as well as slim refining margins.

The company also attributed the decline to a slump in sales of oil products and increased well write-offs upstream. However, it gained from "very strong crude and oil products trading and optimisation results as well as lower operating expenses."

Shell swung to an adjusted upstream loss of $1.5bn, down from a $1.26bn gain a year earlier. Adjusted earnings at its integrated gas business slumped 79% to $362mn, although income from its oil products division climbed 89% to $2.4bn, as refining and trading earnings surged to $1.5bn, from a mere $52mn a year earlier.

"Shell has delivered resilient cash flow in a remarkable challenging environment. We continue to focus on safe and reliable operations and our decisive cash preservation measures will underpin the strengthening of our balance sheet," Shell CEO Ben van Beurden said. "Our high-quality integrated portfolio, disciplined execution and forward-looking strategy enable sustained competitive free cash flow generation"

Shell booked a net loss of $18.1bn, versus a $3bn profit a year before, but this was mostly because of a $16.8bn post-tax impairment charge it took after slashing its medium to long-term price forecasts. 

Shell produced 151,000 b/d of liquids in three months, down 5% yr/yr, and 4.37bn ft3/yr of gas, down 2%. But output in the first half was still up 6% for liquids at 157,000 b/d and 4% for gas at 4.48bn ft3/d. LNG sales volumes were down 7% yr/yr in the second quarter at 16.65mn metric tons, but up 1% in the first half at 35.65mn mt.