On Friday, Royal Dutch Shell announced that it would take a $1.7-$2.3 billion write down for the fourth quarter, another financial blow to an industry dealing with oversupply and low prices. The write down is the result of the bad “macro outlook,” Shell said in a press release, which refers to the slowdown in the global economy, weak demand growth and relatively low prices for gas, oil and for refining margins. “Additional well write-offs in the range of $100-200 million are expected compared to the fourth quarter 2018. No cash impact is expected,” Shell said in a statement. The company’s share price in London fell 1 percent on the news.
The announcement comes a little over a week after Chevron revealed a much larger $10-$11-billion write down. At the time, analysts had warned that Chevron would not be alone, and that there would be more charges related to companies having overpaid for assets years ago, only to watch the market deteriorate. All the while, the industry – at least in the aggregate – has failed to prove that it can turn a profit from shale drilling. Since October, Repsol, BP, Equinor and Halliburton have written down a combined $20 billion in assets.