LONDON (REUTERS) - Royal Dutch Shell avoided its first quarterly loss in recent history helped by its trading business but announced nearly US$17 billion in impairment charges reflecting its lowered short-term oil and gas price outlook.
Shell had warned last month it was set to slash the value of its oil and gas assets by up to US$22 billion (S$30.3 billion) after the coronavirus crisis hit energy demand and weakened the outlook.
"Shell has delivered resilient cash flow in a remarkably challenging environment," chief executive Ben van Beurden said in a statement on Thursday (July 30).
The Anglo-Dutch company however warned of the continued impact of the pandemic on oil and natural gas prices and sales in the third quarter.
Shell has responded to the pandemic by cutting its dividend for the first time since World War Two and slashing planned spending by US$5 billion to a maximum of US$20 billion this year.
Movement restrictions to limit the spread of the virus have knocked energy demand with benchmark Brent oil prices falling below US$30 a barrel in the second quarter, down by more than half from a year earlier.
Adjusted earnings in the second quarter, which exclude special items and are adjusted to cost of supply, fell to US$600 million from US$3.5 billion a year ago, beating analysts forecasts of a US$674 million loss.
The earnings "reflected very strong contributions from crude and oil products trading and optimisation as well as lower operating expenses," Shell said.
Refining and trading operations earnings jumped to US$1.5 billion, nearly 30 times higher than a year earlier, even as refinery crude oil processing rates fell by a quarter.
Shell, the world's largest retailer with over 40,000 petrol stations, also saw a 39 per cent drop in fuel sales, it said.