Shell is expecting to write-down between $3.5 to $4.5bn in post-tax charges relating to impairments, asset restructuring and onerous contracts in the fourth quarter.
In an update to its fourth quarter outlook at the end of October, the oil and gas giant stated that these expected charges relate to upstream, oil products and integrated gas.
Within integrated gas, "significant margining outflows" have impacted cash flow from operations in the fourth quarter so far, compared with margining related inflows at the end of the third quarter.
In terms of upstream, adjusted earnings are expected to show a loss in the current price environment, while depreciation is expected to be $100 to $200m higher compared with the third quarter.
Tax charges in the range of $600 to $900m are expected to negatively impact earnings in the fourth quarter.
Cash flow from operations is also expected to be hit by the settlement of previously booked provisions in the range of $400 to $500m.
In the fourth quarter, Shell's refineries are expected to have been utilised at around three quarter of their capacity, due to the effects of hurricanes in the Gulf of Mexico - which hit production by between 60,000 and 70,000 barrels - and mild weather in Northern Europe impacting demand during the first part of the quarter.
As for oil products, realised gross refining margins are expected to be slightly improved compared with the third quarter.
Marketing results are expected to be in line with the fourth quarter 2019, while significantly lower compared with the record third quarter, due to lower volumes driven by seasonal trends.
Trading and optimisation results are also expected to be significantly lower compared with the third quarter.
Significant derivatives related outflows have impacted operational cashflow in the fourth quarter so far, compared with derivatives related inflows at the end of the third quarter.
Corporate adjusted earnings are expected to be a net expense of $900 to $975m for the fourth quarter, impacted by unfavourable movements in deferred tax positions.
Higher underlying operating expenses due to increased activity compared to the third quarter are also expected to impact earnings across all Shell businesses.
In June, the Anglo-Dutch company wrote down the value of its assets by up to $22bn, before posting an $18bn loss in its second quarter results. Then in October, it announced a further $1.5bn in impairment charges during the third quarter, along with cutting 9,000 jobs by the end of 2022.
The company stated that it will provide a strategy update on 11 February.
