Shell Earnings Boosted by Higher Oil, Gas Production on Quarter — Energy Comment

By Christian Moess Laursen

Shell's oil and gas production jumped compared with the prior quarter, helping it beat financial forecasts by market analysts. Here is what the British energy major had to say.

Integrated gas:

The integrated gas division includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products.

"Segment earnings, compared with the fourth quarter 2023, reflected the net effect of lower contributions from trading and optimization and higher realized prices (decrease of $1,153 million), partly offset by favorable deferred tax movements ($327 million), higher volumes (increase of $276 million), and lower operating expenses (decrease of $213 million)."

"Total oil and gas production compared with the fourth quarter 2023 increased by 10% mainly due to lower maintenance at Prelude [offshore Australia] and Pearl GTL [in Qatar].

"LNG liquefaction volumes increased by 7% mainly due to lower maintenance at Prelude"

Upstream:

The upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas.

"Segment earnings, compared with the fourth quarter 2023, reflected deferred tax help in the fourth quarter 2023 resulting in unfavorable tax movements ($852 million) and higher well write-offs (increase of $383 million)."

"Total production was in line with the fourth quarter 2023. Higher scheduled maintenance was fully offset by improved performance and new oil delivery."

Marketing:

The marketing segment comprises the mobility, lubricants, and sectors and decarbonization businesses.

"Segment earnings, compared with the fourth quarter 2023, reflected lower operating expenses (decrease of $234 million), offset by higher tax charges (increase of $160 million) due to incidental tax helps in the fourth quarter 2023."

"Marketing margins were in line with the fourth quarter 2023 and included higher Lubricants margins due to seasonality offset by lower Mobility margins due to seasonality and lower Sectors and decarbonization margins."

"Marketing sales volumes (comprising hydrocarbon sales), compared with the fourth quarter 2023, decreased mainly due to seasonality."

Chemicals and products:

The chemicals and products segment includes chemicals manufacturing plants and refineries, which turn crude oil and other feedstocks into a range of oil products.

"Segment earnings, compared with the fourth quarter 2023, reflected higher Products margins (increase of $1.197 billion) mainly driven by higher margins from trading and optimization and higher refining margins due to higher utilization and global supply disruptions."

"Segment earnings also reflected higher Chemicals margins (increase of $291 million) due to improved margin environment and utilization and also included higher income from joint ventures and associates."

"In addition, the first quarter 2024 reflected lower operating expenses (decrease of $174 million)."

"Chemicals manufacturing plant utilization was 73% compared with 62% in the fourth quarter 2023, due to lower planned and unplanned maintenance in North America."

"Refinery utilization was 91% compared with 81% in the fourth quarter 2023, due to lower planned maintenance in North America."

Write to Christian Moess Laursen at christian.moess@wsj.com

(END) Dow Jones Newswires

May 02, 2024 03:42 ET (07:42 GMT)

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