Ahead of its full-year results, Royal Dutch Shell is expected to post weaker margins in its refining, trading and marketing division.
The company is also expected to write down up to $2.3billion in the fourth quarter as it had been forced to shrink estimates for sector values, due to a weaker economic outlook. It would maintain spending on the lower end of forecasts amid slowing demand for oil and gas.
The Anglo-Dutch company warned in October that trade tensions between the United States and China, the world’s two largest energy consumers, could hurt demand and take a toll on its performance.
Shell, according to Reuters’ report, said it was expecting to take post-tax impairment charges in a range between $1.7billion and $2.3billion for the quarter “based on the macro outlook”. It did not say which assets the impairments relate to.
What it implies: The impairment will likely increase Shell’s debt ratio, or gearing, which the company has struggled to reduce in recent years.
“This reduction in guidance and impairment appears to show that management underestimated how much weaker oil prices would be in the latter part of this year, as well as underestimating future demand for oil, along with its by-products,” said Michael Hewson, Chief Market Analyst at CMC Markets UK.
Its shares were down 1.1% by 11.45 GMT on Friday, compared with slight gains on the broader European energy index.SXEP.
Shell, which had beaten third-quarter profit expectations on strong oil and gas trading, also warned that higher taxes would hit earnings by about $500 million to $600 million in the fourth quarter.
The company said it expected additional good write-offs in the range of $100 million to $200 million in the period, while 2019 capital expenditure was expected to be at the lower end of its guidance range of $24 billion to $29 billion.
Shell not alone…
Since October, rivals Chevron, BP Equinor and Spain’s Repsol all wrote down a total of around $20billion, primarily in the United States shale gas assets due to lower long-term gas prices.
For instance, Chevron announced a $10 billion to $11 billion write-down on several natural gas assets and one of its oil projects in the Gulf of Mexico.
The company said that the downward revision in its long-term price outlook means that it will “reduce funding to various gas-related opportunities.”
- The decision largely focuses on shale gas holdings in Appalachia, but also the Kitimat LNG project in Canada and other international holdings.
- The company is exploring options including asset sales.
- It also said its revised oil price outlook led to the impairment charge on its Big Foot project.
uLesson raises $7.5 million Series A round
uLesson has announced that it has closed a $7.5M Series A round.
uLesson, a Nigerian educational learning platform that leverages best in class teachers, media, and technology solutions to create high-quality, affordable and accessible education for African students, announced that it has closed a $7.5M Series A round.
This funding round was led by US-based Owl Ventures, which is focused on education as an investment. It was also backed by existing investors — Founder Collective and TLcom .
Founded by Sim Shagaya, uLesson curates personalised, curriculum-relevant content via mobile and PC devices for students in the K-7 to K-12 segment across the continent. Students can access the lessons via streaming and SD cards, where they can download and store the content, allowing them to study remotely, removing challenges around internet access limitations and costs.
According to Sim Shagaya,
- “The uLesson app has now been downloaded a million times with paying users from at least 7 countries (including countries we don’t formally serve). On average, learners spend around 77 minutes on the app daily — a figure that exceeds the engagement levels on most social networking apps.
- “Our goal is that ten years from now, K-12 education on the continent will bear little semblance to what you see today. But it won’t just be different, it will be better on most dimensions and much more affordable.
- “We also believe that the impact borne of the marriage of education and technology will be greater on the African continent than any other place in the world.”
This funding will be deployed to power uLesson’s expansion into Eastern & Southern Africa, as well as secure new talent and build its product development and production infrastructure.
CAP and Portland Paints obtain Federal High Court approval on proposed scheme merger
A Federal High Court approved the proposed scheme merger between Chemical Allied Products Plc and Portland Paints Plc.
The Judicial Divison of the Federal High Court has approved the proposed scheme merger between Chemical Allied Products Plc and Portland Paints Plc, and other matters connected therewith.
In line with this, the Federal High Court ordered that a meeting of the holders of the fully paid ordinary shares of Portland Paints and Products Nigeria be convened and held for the purpose of considering and approving a Scheme of Merger between the concerned entities.
Portland Paints disclosed this on the NSE before the open of trade today.
The statement said upon approval by the shareholders at the court-ordered meeting, which will be held at 12:00 pm on Thursday, 18 February 2021 at Radisson Blu Hotel, the subjoined resolutions of the Scheme Merger shall be effected.
Overview of the Scheme Merger and options offered to shareholders
For the purpose of giving effect to the Merger as would be agreed between the Company and the Holders of the Fully Paid Ordinary Shares of Portland Paint Plc and Chemical and Allied Products PLC at the court-ordered meeting, shareholders of Portland Paint Plc at the close of business on the Terminal Date shall be offered the option:
- To receive a Cash Consideration of N2.90 for each ordinary share of N0.50 held in Portland Paints as at close of business on the Terminal Date.
- Or be allotted 1 ordinary share of N0.50 each in the share capital of CAP (credited as fully paid) in exchange for every 8 ordinary shares of N0.50 each held in Portland Paints.
Implied impact of the Scheme Merger between CAP and Portland Paints
Upon the Scheme becoming effective, the following modification shall be made:
- All assets and liabilities of Portland Paints including but not limited to real property, intellectual property rights, permits, credits, allowances, equipment and machinery, plant, fixtures and fittings, motor vehicles and businesses, shall be transferred to CAP.
- All employees and undertakings rights, powers and duties of a personal character, which could not generally be assigned or performed vicariously, of the Company shall be transferred to CAP.
- All legal proceedings, claims and litigations pending or contemplated by or against the Company be continued by or against CAP.
- The entire share capital of the Company shall be cancelled, and the Company shall be dissolved without being wound up.
- All contracts of the Company shall continue to be in force and effect in accordance with their respective terms and conditions, and CAP shall assume all rights and obligations of the Company under all such contracts.
- All monies standing to the credit of the Company at banks and with other debtors within and outside Nigeria be held to the credit of CAP.
Price Watch: Consumers paid more for diesel and less for petrol in December
The December 2020 NBS report shows that consumers paid more for diesel and less for petrol than they did in November 2020.
The Price Watch report released by Nigeria Bureau of Statistics (NBS) for the month of December 2020 revealed that consumers paid more for Diesel (Automotive Gas Oil) and less for Petrol (Premium Motor Spirit), compared to that of November 2020.
The average price paid by consumers for diesel increased by 0.28%, from N223.74 in November 2020 to N224.37 in December 2020, while the average price paid by consumers for petrol decreased by 0.94% from N167.27 in November 2020 to N165.70 in December 2020.
Key highlights of the report
- Consumers in Taraba (N266.00), Adamawa (N262.50) and Zamfara (N257.50) paid the highest average price for Diesel.
- While consumers in Kwara (N195.00), Gombe (N197.50) and Osun (N201.09) paid the lowest average price for Diesel.
- Overall, consumers in North West (N240.57), North East (N238.88) and North Central (N226.37) paid the highest average price for Diesel, while consumers in South West (N209.27), South East (N209.35) and South South (N216.25) paid the lowest average price.
- Consumers in Abia (N176.19), Kwara (N172.43) and Kebbi (N169.92) paid the highest average price for petrol.
- While consumers in Kaduna (N155.00), Katsina (N160.25) and Bauchi (N162.57) paid the lowest average price for petrol.
- Overall, consumers in South East (N168.04), North Central (N166.94) and South South (N166.53) paid the highest average price for petrol, while consumers in North West (N163.79), North East (N164.47) and South West (N164.92) paid the lowest average price.
Since a lot of manufacturing companies rely heavily on diesel to power their machinery and equipment, the increase would have added to their cost of operations, culminating in consumers paying more for goods and services.
Also, one would have expected that the reduced price of fuel in December 2020 would lead to lower transport fares for commuters during the festive season, but that was not the case.