Shell reverses billions in write-offs as oil prices remain high

Oil giant Shell is to reverse previous write-offs of up to £3.8 billion this quarter after energy prices soared.

The company said it expects to reverse post-tax impairments of between 3.5 billion dollars (£2.9 billion) and 4.5 billion dollars (£3.8 billion).

It came as the business revised what it thinks it will be paid for its oil and gas over the coming years.

It told shareholders on Thursday: “In the second quarter 2022, Shell has revised its mid- and long-term oil and gas commodity prices, reflecting the current macroeconomic environment as well as updated energy market demand and supply fundamentals.

“This resulted in a review of Shell’s upstream and integrated gas previously impaired assets.”

Shell also said it will produce more gas during the second quarter of the year than previously thought amid the global energy crisis.

The business told investors that it expects to extract between 930,000 and 980,000 barrels of oil equivalent per day from its integrated gas operations.

It is an upgrade from its previous estimate of between 910,000 and 960,000, which Shell released in early May.

It also upgraded production from its upstream operations. They had previously been expected to fall from the levels seen in the first quarter due to maintenance in the Gulf of Mexico.

The range was narrowed from between 1.75 million and 1.95 million barrels of oil equivalent per day to 1.85 million to 1.95 million on Thursday.

Shares in the business rose after markets opened on Thursday, ticking up 1.6%.

The price of oil, which has fallen in recent days, rose slightly on Thursday to 101.08 dollars per barrel.

Shell is one of many oil and gas companies around the world that has benefited from rising energy prices over the last year.

The price of gas has beaten previous records several times this year.

But the price rises have also put pressure on customers, pushing up energy bills by 54% in April to just under £2,000 for the average household.

This is expected to jump further to around £3,000 in October when the price cap on energy bills is changed again.