Royal Dutch Shell PLC (NYSE:RDS.A) unveiled a $2 billion writedown of its North American shale assets and subsequently posted a 60 percent drop in second-quarter profits as costs and risks associated with the operations are rising.
Shell's North American drilling operations have been struggling lately, prompting the company to launch a strategic review to consider the sale of some assets. According to the Wall Street Journal, it is looking to sell about half of its main nine unconventional oil and gas assets.
Shell CEO Peter Voser said he thinks the firm's North America energy development is performing well and that the reduction in value of its assets comes from the greater risks involved in exploring shale formations.
Shell also fell short in its earnings because of higher exploration costs and production disruptions in Nigeria.
These variables, Voser said, “hit our bottom line. These results were undermined by a number of factors, but they were clearly disappointing for Shell.”
The company reported revenue of $112.67 billion, compared to $117.07 billion in the second quarter of 2012.