7th Jul 2023 10:53
(Alliance News) - Shell PLC on Friday said it expects to report broadly stable but in some cases decreased production for the second quarter of 2023 and lower earnings.
The London-based major oil and gas company said it expects integrated gas production between 950,000 and 990,000 barrels of oil equivalent per day for the second quarter of 2023, compared with 970,000 barrels in the first quarter.
Production reached 944,000 barrels in the second quarter of 2022.
Shell said it expects trading and optimisation in the integrated gas segment to be "significantly lower" compared to the first quarter due to seasonality and lower optimisation opportunities.
It added that the second quarter contribution of integrated gas is expected to be in line with the average contribution of the second quarter in 2021 and 2022, however.
"How much the drop in earnings from its natural gas trading operation is a function of what Shell describes as 'seasonality' in the market, and how much it is just cyclical weakness linked to a softening economy is an open question," said Russ Mould, investment director at AJ Bell.
"Investors appear to be sitting on their hands rather than coming down on one side or another judging by this morning's share price reaction."
Shares in the firm were down 0.2% at 2,260.50 pence on Friday morning in London. Over the past 12 months, the stock is up 11%.
Shell also anticipates second-quarter upstream production between 1.7 million and 1.8 million barrels of oil equivalent per day, down from 1.9 million barrels both in the previous quarter and for the second quarter of 2022.
The company said this reflected scheduled maintenance on various assets, including projects in the Gulf of Mexico, Norway, Malaysia and Brazil.
It added that it expects well write-offs of around USD200 million for its Upstream segment.
For its Marketing division, Shell expects sales volumes to be between 2.4 million and 2.8 million barrels per day, compared with 2.4 million in the previous quarter and from 2.5 million for the same quarter last year.
In Chemicals & Products, Shell expects an indicative refining margin of USD9 per barrel, down from USD15 per barrel in the previous quarter and down sharply from USD28 the year before.
In Renewables & Energy Solutions, Shell said it anticipates adjusted earnings to be somewhere between a USD300 million loss and a USD300 million profit. Regardless, this would be down from earnings of USD400 million in the previous quarter and down from USD700 million in the second quarter of last year.
AJ Bell's Mould said the good news from the trading update is that there may be "a little less ammunition for advocates of harsher windfall taxes". However, the bad news is this is because its results are "likely to be somewhat less impressive than they have been in recent quarters".
By Heather Rydings, Alliance News senior economics reporter
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