Oil price crash could cost Shell $800M
Royal Dutch Shell's stock is up 7% after the oil giant announced the collapse in the price of oil will cost the business millions of dollars. Yahoo Finance’s Oscar Williams-Grut joins the On The Move panel to break down the latest developments.
Video Transcript
- We're gonna go to London and our Oscar Williams-Grut, because one of the big oil players, Royal Dutch Shell, has news about the price of oil. Oscar?
OSCAR WILLIAMS-GRUT: That's right, Adam. And Shell this morning basically warning about what the oil price slump is going to mean for its business. Of course, the price of oil has plummeted since the start of the year. And Shell said they would take between a $400 million and $800 million write-down in just the first quarter as a result of this price slump. They said that for every $10 per barrel that the price of Brent declines, they typically lose about $6 billion of cash flow over the year. It gives you an idea of the slump that we could see if this continues.
However, the stock is actually up today. That's because although they warned on this impairment, they said that they had signed a new $12 billion facility with banks to lend against, in addition to a $10 billion facility they have, and a $20 billion cash pile they're sitting on. Crucially, they didn't mention canning the dividend as a lot of other companies have. We've had over 5 billion pounds worth of dividends canceled since the start of the year. Shell stock is actually up over 7% today.
- All right. Oscar Williams-Grut, thank you very much.
