On Thursday, Shell reported that it expects to write down up to $5 billion in the first quarter following the oil giant’s decision to exit Russia as a consequence to the Russian invasion of Ukraine. The company warned that its cash flows from operations would be “negatively impacted”.
“For the first quarter 2022 results, the post-tax impact from impairment of non-current assets and additional charges (e.g. write-downs of receivable, expected credit losses, and onerous contracts) relating to Russia activities are expected to be $4 to $5 billion,” Shell said.
“These changes are expected to be identified and therefore will not impact Adjusted Earnings,” Shell said. With the release of first-quarter earnings expected on May 5, the company added that it would update investors on the situation at that time.
Shell shares dropped 1.45% in London trading on Thursday, with its U.S-listed shares also declining 0.9%.
Last month, Shell announced that it would halt all its spot purchases of Russian crude oil and also announced plans to shut its service stations, aviation fuels, and lubricants operations in the country.
This came after the company’s announcement that it would cut ties with Gazprom, the Kremlin-controlled energy company, and also end its involvement in the Nord Stream 2 pipeline project.
Energy competitor BP (ticker: BP) also announced in late February its plans to offload a nearly 20% stake in Russian government-controlled giant Rosneft; the company could incur charges of close to $25 billion.