SHEL Shell Plc

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)

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