Royal Dutch Shell said it would perform a “strategic portfolio review” on its North American shale holdings after it reported a more than $2 billion charge this morning, the company reported in its earnings release today.
The impairment figured into a YOY fall in profits of 20% for the quarter, to $4.6 billion.
The Angl0-Dutch firm said exploration and drilling has become costlier. It has holdings in most major liquids-rich plays, including the Eagle Ford in Texas and Bakken in North Dakota.
The FT quoted CFO Simon Henry that “the production curve is less positive than we originally expected.” And there was more bad news on production targets, Ft’s Guy Chazan wrote:
The company had said it was aiming to increase oil and gas output to 4m barrels a day by 2017-18. This has now been “retired”, Mr Voser said.
In its earnings release, Shell said it expects “further focus and divestments there.”
We’ve been reporting on ‘Saudi America‘ for a while as improvements in drilling and exploration have allowed the U.S. and Canada to exploit vast reserves of oil and gas contained in shale rock.
But there’s been debate over just how long the phenomenon can last as production rates slow and drillers are forced to move into more expensive plays.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.