Shell Earnings Hit by Weak Gas Trading, Refining Margins — Energy Comment

By Christian Moess Laursen

Shell's oil and gas production fell in the second quarter of the year mainly due to higher maintenance, while weak refining margins and gas trading tempered earnings. Here's what the British energy giant had to say.

On its integrated-gas unit performance:

"Segment earnings, compared with the first quarter 2024, reflected the combined effect of lower contributions from trading and optimization due to seasonality and realized prices, lower volumes, and unfavorable deferred tax movements."

"Total oil and gas production, compared with the first quarter 2024 decreased by 1% mainly due to higher maintenance, partly offset by production-sharing contract effects. LNG liquefaction volumes decreased by 8% mainly due to higher maintenance."

On its upstream unit performance:

"Segment earnings, compared with the first quarter 2024, reflected lower well write-offs, and lower operating expenses, partly offset by lower volumes."

"Total production, compared with the first quarter 2024, decreased mainly due to higher scheduled maintenance, partly offset by new oil delivery."

On its marketing unit performance:

"Segment earnings, compared with the first quarter 2024, reflected higher marketing margins mainly driven by improved mobility unit margins and seasonal impact of higher volumes and higher sectors and decarbonization margins. Lubricants margins were in line with the first quarter 2024. Segment earnings also reflected favorable tax movements."

"Second quarter 2024 segment earnings also included impairment charges of $783 million mainly relating to an asset in the Netherlands, and charges of $50 million related to redundancy and restructuring."

"Marketing sales volumes, compared with the first quarter 2024, increased mainly due to seasonality."

On its chemicals and products unit performance:

"Segment earnings, compared with the first quarter 2024, reflected lower products margins mainly driven by lower refining margins due to increased supply and lower margins from trading and optimization."

"Segment earnings also reflected unfavorable tax movements. These were partly offset by higher chemicals margins due to higher utilization and improved margin environment."

"Second quarter 2024 segment earnings also included net impairment charges and reversals of $708 million mainly relating to assets in Singapore."

"Chemicals manufacturing plant utilization was 80% compared with 73% in the first quarter 2024, due to lower unplanned maintenance in North America."

"Refinery utilization was 92% compared with 91% in the first quarter 2024."

On its renewable and energy-solutions unit performance:

"Segment earnings, compared with the first quarter 2024, reflected lower margins mainly due to trading and optimization primarily in Europe as a result of lower seasonal demand and volatility as well as lower generation and energy marketing margins, and unfavorable tax movements, partly offset by lower operating expenses."

On third-quarter outlook:

"Cash capital expenditure for full year 2024 is expected to be within $22 billion-$25 billion."

"Integrated Gas production is expected to be approximately 920,000-980,000 barrels of oil-equivalent a day."

"Liquefied natural-gas liquefaction volumes are expected to be approximately 6.8 million-7.4 million metric tons. Third quarter 2024 outlook reflects scheduled maintenance across the portfolio."

"Upstream production is expected to be approximately 1.58 million-1.78 million BOE a day. Production outlook reflects the scheduled maintenance across the portfolio."

"Marketing sales volumes are expected to be approximately 2.70 million to 3.20 barrels a day."

"Refinery utilization is expected to be approximately 83%-91%. Chemicals manufacturing plant utilization is expected to be approximately 73%-81%."

"Corporate adjusted earnings are expected to be a net expense of approximately $500 million-$700 million in the third quarter."

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

(END) Dow Jones Newswires

August 01, 2024 09:11 ET (13:11 GMT)

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