USD 92.5919

+0.02

EUR 100.2704

-0.14

Brent 86.36

+0.67

Natural gas 1.691

-0.02

2368

Shell moves to cut costs due to coronavirus outbreak

Shell moves to cut costs due to coronavirus outbreak

The Hague, March 24 - Neftegaz.RU. In response to the current market environment, Shell has decided to reduce its operating costs by up to $4 billion in 2020 and to cut its capital expenditure from $25 billion to $20 billion. Shell said its taking decisive action to reinforce the financial strength and resilience of its business so that it is well-positioned for the eventual economic recovery.

“As well as protecting our staff and customers in this difficult time, we are also taking immediate steps to ensure the financial strength and resilience of our business,” said Ben van Beurden, CEO of Shell. “The combination of steeply falling oil demand and rapidly increasing supply may be unique, but Shell has weathered market volatility many times in the past.”

In order to deliver sustainable cash flow generation, Shell is actively managing all its operational and financial levers – from focusing on maintaining safe and reliable operations each day to reducing capital spend and operating expenses.

According to the company, it is embarking on a series of operational and financial initiatives that are expected to result in reduction of underlying operating costs by $3-4 billion per annum over the next 12 months compared to 2019 levels; reduction of cash capital expenditure to $20 billion or below for 2020 from a planned level of around $25 billion; and material reductions in working capital.

Together, these initiatives are expected to contribute $8 – 9 billion of free cash flow on a pre-tax basis. Shell is still committed to its divestment program of more than $10 billion of assets in 2019-20 but timing depends on market conditions.

The board of Shell has decided not to continue with the next tranche of the share buyback program following the completion of the current share buyback tranche.

“We will continue to review the dynamically evolving business environment and are prepared to take further strategic decisions and consider changes to the overall financial framework as necessary,” Shell said.

Shell said that its liquidity remains strong, with around $20 billion in cash and cash equivalents, $10 billion of undrawn credit lines under the revolving credit facility and access to extensive commercial paper programs.

Follow us on Facebook
Advertising at neftegaz.ru

Subscribe to our newsletter

of the best materials Neftegaz.RU

* Incorrect E-Mail Address

By clicking the "Subscribe" button I accept the "Agreement on the processing of personal data"


Advertising at neftegaz.ru