Shell Flags Earnings Hit of Up to $4.5 Billion From Impairments -- 2nd Update
January 08 2024 - 5:10AM
Dow Jones News
By Christian Moess Laursen
Shell said its fourth-quarter earnings took a hit of between
$2.5 billion and $4.5 billion in impairments that were offset by
significantly higher gas trading, while its overall production
volumes are on track to meet targets.
The London-based energy giant said Monday that the impairments
were primarily driven by macro developments as well as portfolio
choices, including its Singapore chemicals and products assets,
which it has been trying to sell.
The FTSE 100 leader by market cap also said it expects its cash
flow from operations to be hit by a $900 million charge from
emissions permits in Germany and the U.S., The number of permits
Shell is required to buy is determined by the amount of fuel sold
and the emissions associated with that fuel. These payments
typically take place in the fourth quarter.
Gains from integrated gas trading are expected to be
significantly higher on-quarter, despite declining oil and gas
prices throughout the period, with oil hitting a five-month low in
early December, reflecting supply and demand concerns despite
support from geopolitical uncertainty.
Analysts at Barclays forecast an 8% drop in earnings on-quarter
across the European integrated energy sector, driven by lower oil
prices and refining margins and seasonally higher costs, they write
in a research note.
The quarterly result looks to be dragged by significantly lower
trading from chemicals and crude oil refineries, which is
anticipated to post an adjusted earnings loss, the fossil-fuel
company said.
Shell expects to report integrated gas production between
880,000 and 920,000 oil-equivalent barrels a day for the fourth
quarter, which would be in line with its guided range of
870,000-930,000 BOE a day, and compares with third-quarter
production of 900,000 BOE a day.
Fourth-quarter volumes of liquefied natural gas--LNG--are
expected to be between 6.9 million and 7.3 million metric tons
compared with 6.9 million tons in the preceding quarter. Shell
previously expected 6.7 million-7.3 million tons.
Upstream production--the extraction of crude oil and natural
gas--is expected to meet the guided range of 1.75 million-1.95
million BOE a day at 1.83 million-1.93 million a day. It reported
1.75 million BOE a day in the third quarter.
Shell's quarterly result from retailing oil and other products
such as lubricants is expected to be similar to the prior-year's
same quarter, as sales volumes should be between 2.35 million and
2.75 million barrels a day, meeting the guided 2.25 million-2.75
million.
At 0904 GMT, shares were down 2.1% at 2,516.50 pence.
Write to Christian Moess Laursen at christian.moess@wsj.com
(END) Dow Jones Newswires
January 08, 2024 04:54 ET (09:54 GMT)
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