Shell Expects Corporate Loss, Higher Gas Output

First quarter trading update predicts higher gas production but also a tax-adjusted loss in its corporate division

Alliance News 6 April, 2023 | 10:31AM
Facebook Twitter LinkedIn

arrow up

Oil major Shell (SHEL) has just updated the market on its expectations for the first quarter, and it’s a mixed bag. In a statement to the stock market, it broke down forecasts for the following divisions against fourth quarter data: Integrated Gas, Upstream, Marketing, Chemicals and Products, Renewables and Energy Solutions and Corporate.

The company expects a rise in Integrated Gas production in the first quarter of 2023, though it predicted an adjusted corporate loss on a tax hit.

Shell predicted an adjusted loss in its corporate segment between $900 million (£721 million) and $1.2 billion, widening from $600 million in the fourth quarter of 2022. This division reports separately from the group, whch reported record profits of $40 billion for the full year in February.

The outcome includes one-off tax charges, the company said. It expects Integrated Gas adjusted earnings pre-tax depreciation between $1.2 billion and $1.6 billion, compared to $1.4 billion in the fourth quarter.

Oil company profits have come under tax scrutiny recently and Shell is one of a number of companies to be paying the UK government’s windfall tax (as well as separate EU windfall taxes). Shell put a figure of $2 billion for its expected windfall tax charge in Q4. Energy firms have benefitted from robust oil prices, a stark contrast to a cost-of-living crisis consumers are suffering from.

Upstream adjusted earnings are expected between $2.8 billion to $3.1 billion, compared to $2.9 billion.

For Integrated Gas, it forecast production between 930,000-970,000 barrels of oil equivalent (boe), up from 917,000 boe in the fourth quarter.

Upstream production volumes are expected to be within a similar range to the previous quarter, between 1.8 million and 1.9 million boe per day, compared to 1.85 million in the fourth quarter.

Shell shares, which rose nearly 2% on Thursday trading, are rated as fairly valued by Morningstar analysts.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Alliance News  provides Morningstar with continuously updating coverage of news affecting listed companies.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures