In major news on UK stocks, energy giant Shell (GB:SHEL) is hit by non-cash post-tax impairment charges of up to $2 billion related to the Rotterdam biofuels facility and Singapore refinery. Nonetheless, the company expects improved production in its integrated gas and upstream segments as per its second-quarter trading update. Following the update, Shell shares had lost 0.66% as of writing.
Shell is a leading oil and gas company that provides a wide range of energy products, including fuels, oil, liquefied petroleum gas (LPG), lubricants, etc.
Shell’s Impairment Woes
Shell is expected to record an impairment charge between $600 million and $1 billion for its Rotterdam biofuels facility in the Netherlands. Earlier this week, the company paused its construction work at this facility due to weaker market conditions in the biofuels segment. Following this pause, the number of contractors and activity will be reduced at this facility to control costs and decide the right path for the project.
Along with this, Shell will report an impairment charge of up to $800 million linked to the Singapore chemicals and products facility, which it has agreed to sell to a joint venture between Glencore (GB:GLEN) and Indonesia’s PT Chandra Asri Pacific.
More from Shell’s Q2 Trading Update
For the second quarter that ended on June 30, Shell indicated that its natural gas production will range between 940,000 and 980,000 boe/d (barrels of oil equivalent per day), surpassing the anticipated range of 920,000 and 980,000 boe/d.
Additionally, Shell upgraded its forecast for the Upstream segment of its business. The lower end of the output range has been raised by 90,000 boe/d to 1.72 million boe/d, while the upper end of the range has seen a slight reduction to 1.82 million boe/d. The previous guided range was 1.63 million boe/d and 1.83 million boe/d.
The company will publish its second-quarter results for FY24 on August 1.
Are Shell Shares a Good Buy Now?
According to TipRanks consensus rating, SHEL stock has earned a Strong Buy rating based on 13 Buy and two Hold recommendations. The Shell share price target of 3,229.38p implies a 12% increase on the current price level.
