Shell Shares Rise as It Weathers Coronavirus Headwinds
March 31 2020 - 10:21AM
Dow Jones News
By Sarah McFarlane
Royal Dutch Shell PLC's shares jumped 7.4% Tuesday after it said
the coronavirus outbreak had a relatively minor impact on the first
two months of the first quarter.
In its quarterly trading update on Tuesday, Shell said it
expects the sharp fall in oil prices to result in a "material
working capital release" but the company said its liquidity remains
strong with a new $12 billion revolving credit facility.
Shell has $40 billion available liquidity and access to
extensive paper programs.
The energy giant's results for the January-March quarter are
likely to reflect two months of normal activity and one month of
extreme volatility, said RBC Capital Markets in a note. Aside from
an impairment charge of up to $800 million, headline cash flow
should be "flattered" by a working-capital release, which RBC
estimated at $10 billion.
"We think Shell has the balance-sheet capacity and ability to
cut capex to survive in the current environment without a
significant cut to dividends, but if this outlook was to last for
more than 9-12 months, we would expect a cut," said RBC.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com
(END) Dow Jones Newswires
March 31, 2020 10:06 ET (14:06 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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