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Shell sees decrease in Upstream production

Oil&Gas Materials 30 July 2020 10:57
Shell sees decrease in Upstream production

BAKU, Azerbaijan, July 30

By Leman Zeynalova – Trend:

Compared with the first half 2019, total production of Shell in Upstream decreased by 6 percent, mainly due to the impact of divestments, lower production in the NAM joint venture and the challenging macroeconomic environment (which included OPEC+ restrictions and COVID-19-related restrictions), field ramp-ups in the Santos Basin, Brazil, the US Gulf of Mexico and Permian, USA, more than offset field decline, Trend reports citing Shell.

“Half year segment earnings were a loss of $7,584 million. This included a post-tax impairment charge of $5,074 million mainly related to unconventional assets in North America, assets offshore in Brazil and Europe, a project in Nigeria (OPL245), and an asset in the US Gulf of Mexico. Also included were a net charge of $916 million related to the impact of the weakening Brazilian real on a deferred tax position, and redundancy and restructuring costs of $191 million. These net charges are part of identified items,” the company said.

Compared with the first half 2019, Upstream Adjusted Earnings were a loss of $1,220 million primarily reflecting lower realised oil and gas prices and lower gas volumes, according to Shell.

Cash flow from operating activities for the first half 2020 was $5,926 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, as well as positive working capital movements, cash effect of tax and the settlement for the Lula unitisation in Brazil, Shell said in its report.

“Second quarter segment earnings were a loss of $6,721 million. This included a post-tax impairment charge of $4,658 million mainly related to unconventional assets in North America, assets offshore in Brazil and Europe, a project in Nigeria (OPL245), and an asset in the US Gulf of Mexico. Also included were a net charge of $187 million mainly related to a reduction in discount rate used for provisions, as well as redundancy and restructuring costs of $183 million. These net charges are part of identified items.”

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