Investors in Shell PLC (LSE:SHEL, NYSE:SHEL) held their nerve after the oil and gas major told the market that its decision to withdraw from Russia will result in a hit of up to US$5bn in the first quarter.
In February, Shell exited three joint ventures with Gazprom following Russia's invasion of Ukraine. The write-down of receivables, expected credit losses, and onerous contracts relating to its Russia activities are expected to lead to US$4bn-US$5bn of charges, investors were told. Previous estimates had put the figure at US$3.4bn.
In the same announcement, the market learned the oil giant had seen US$7bn of cash outflow.
This, Shell said, reflected the “unprecedented volatility in commodity prices prevailing up to the end of the quarter".
It added that “material additional movements could be seen in cash flow from operations from margining effects on derivatives, changes in inventory volumes and in accounts payable and receivables”.
Shell said earnings from oil and gas trading were expected to be ‘significantly higher’ in the period to end-March as the price of both commodities has soared.
In a wide-ranging trading statement, the group provided guidance on areas such as production, depreciation and tax charges, but failed to give an over-arching target for earnings and profitability.
It said it hoped to share consensus data once collated on April 28.
Shell shares were down 12.5p or 0.6%, to change hands for 2,118.96p.