Please ensure Javascript is enabled for purposes of website accessibility

Royal Dutch Shell Reports Big Q2 Loss Due to Coronavirus

By John Bromels – Jul 30, 2020 at 1:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The dismal results forecast a gloomy earnings season for big oil.

Oil supermajor Royal Dutch Shell (RDS.A) (RDS.B) reported an $18.1 billion net loss in Q2 2020, as oil prices and energy demand slumped due to the coronavirus pandemic.

It was only the company's third quarterly net loss in the last decade and the first time it has ever reported consecutive quarterly net losses, following a $24 million net loss in Q1. Those Q1 results prompted the company to slash its dividend for the first time since World War II.

An electronic sign reading "Oil," followed by a downward red arrow.

Image source: Getty Images.

Real numbers

As an Anglo-Dutch company, Shell reports results slightly differently than U.S.-based oil supermajors ExxonMobil and Chevron, which will announce their own earnings on Friday.

On a "net current-cost-of-supplies (CCS) basis," Shell reported a $18.4 billion loss, with adjusted earnings per American depositary share of $0.16, excluding identified items. That adjusted figure beat Wall Street's expectation of a $0.31-per-share loss. Production declined about 7% year over year, to 2.4 million barrels of oil equivalent per day (BOE/D).

Unsurprisingly, all of these figures were down significantly from the year-ago quarter.

What it all means

The results would have been much worse if it hadn't been for Shell's trading activities, which allowed the company to profit off of the volatility of energy prices. CFO Jessica Uhl said it was the best quarterly performance on record for Shell's trading unit.

Despite that success, Shell's Q3 outlook is gloomy. It expects its oil production to continue to decline, to between 2.1 million and 2.4 million BOE/D, and forecasts an average 2020 Brent crude price of $35 per barrel.

Expect more doom and gloom from the oil industry as earnings season continues.

John Bromels has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.