Royal Dutch Shell Plc will halt exploration in the U.S. Arctic after $7 billion of spending ended with a well off Alaska that failed to find any meaningful quantities of oil or natural gas.
Shell said it expects to take financial charges related to the Alaskan operations, which carry a value of about $3 billion on its balance sheet with additional contractual commitments of about $1.1 billion. The Hague-based company will cease further offshore activity in the region for the foreseeable future. The shares fell as much as 1.4 percent.
“This could be negative for third-quarter earnings because of potential impairment charges,” Ahmed Ben Salem, a Paris-based analyst with Oddo & Cie, said by phone. “On the other hand, in a $50 oil-price environment it’s not so bad to abandon that search because it’s expensive. Shell has enough resources already.”