7th Oct 2021 08:18
(Alliance News) - Royal Dutch Shell PLC on Thursday cautioned its third quarter earnings will take around a USD400 million hit from Hurricane Ida, which battered the oil asset-rich US Gulf of Mexico region.
The chunkiest hit, forecast between USD200 million and USD300 million, will be at the oil major's Upstream arm. Oil Products will see hurt of around USD50 million to USD100 million and Chemicals a USD100 million hit.
Hurricane Ida formed on August 26 and battered parts of America. Shell in September said roughly 60% of its producing assets in the Gulf of Mexico region were back online, however. It also in September noted its majority-owned West Delta-143 facility in the Gulf of Mexico suffered "significant structural damage" due to the hurricane.
Production in its Upstream arm is tipped to land between 2.0 million and 2.1 million barrels of oil equivalent per day in the third quarter, at best a 4.7% decline from a year earlier and an 18% drop from pre-virus levels in 2019.
In its Oil Products arm, sales volumes between 4.3 million and 5.3 million barrels per day are expected for the third quarter. Sales volumes in the third quarter of 2020 amounted to 4.7 million barrels per day, so Shell's forecast ranges from a 9.3% annual decline, to a 12% hike. At best, however, volumes would be down 22% from two years earlier.
Chemicals sales volumes are tipped to land between 3.4 million and 3.7 million tonnes, potentially a 3.2% yearly decline from 3.8 million barrels a year earlier.
In Integrated Gas, production of 890,000 to 950,000 boepd is expected, potentially an improvement of 13% year-on-year and 5.1% from 2019 levels.
It also noted the unit's fortunes could be boosted by high gas and electricity prices.
Shell added: "[Cash flow from operations] excluding working capital is expected to be significantly impacted by large variation margin inflows on the back of the prevailing gas and electricity price environment; these inflows are expected to be higher than the second quarter 2021."
The cost of natural gas prices in Europe has shot up in recent weeks and months, hitting consumers and smaller energy providers.
Shell releases third quarter results on October 28.
Shell 'A' shares were up 0.4% at 1,658.60 pence in London early Thursday, while 'B' shares were up 0.2% at 1,667.00p.
By Eric Cunha; [email protected]
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