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TOP NEWS: Shell shares fall as indicative refining margin plummets

6th Oct 2022 09:40

(Alliance News) - Shell PLC on Thursday issued an update for its third quarter that ended September 30, warning that a fall in indicative refining margins will cost it at least USD1.0 billion.

Shell shares fell 4.0% to 2,284.00 pence each on Thursday morning in London.

The London-based oil and gas major said it expects an indicative refining margin of USD15 per barrel, down 46% from USD28 in the second quarter of 2022. This will have a negative impact for Products of around USD1.0 billion to USD1.4 billion on third quarter adjusted earnings before interest, tax, depreciation and amortisation, Shell cautioned.

Further, it expects Upstream production to be around 1.8 million to 1.9 million barrels of oil equivalent per day, down from 2.1 million it produced for the third quarter of 2021.

It also warned trading and optimisation results for Integrated Gas will be "significantly lower" compared to the second quarter of this year.

The firm explained this was the "result of seasonality and substantial differences between paper and physical realisation in a volatile and dislocated market." It anticipates the unit's production of 890,000 to 940,000 barrels of oil equivalent per day, compared to 938,000 a year ago.

"Shell enjoyed record profits in the first and second quarter spurred by a surge in underlying oil and gas prices following Russia's invasion of Ukraine. However, since June, oil has posted four consecutive months of declines, with Brent crude down by around 25% even after this week's countertrend rally," said Victoria Scholar, head of investment at interactive investor.

"In what is a notoriously cyclical business, Shell is grappling with a dysfunctional and volatile gas market as well as expectations of softening oil demand, particularly from China as the global economy cools," she continued.

Brent oil was quoted at USD93.23 a barrel at the London equities open Thursday, down from USD93.34 late Wednesday.

By Tom Budszus; [email protected]

Copyright 2022 Alliance News Limited. All Rights Reserved.

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