Shell Flags Earnings Hit of Up to $4.5 Billion From Impairments -- Update

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 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 take a hit from a $900 million charge related to timing of payments of emissions.

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.

Gains from integrated gas trading are expected to be significantly higher on-quarter, while the trading result from chemicals and crude oil refineries is seen to be significantly lower. The former segment is expected to make an adjusted earnings loss, the fossil-fuel company said.

However, the expected uptick in fourth-quarter gas trading comes 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.

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.

Write to Christian Moess Laursen at [e-mail]

(END) Dow Jones Newswires

January 08, 2024 03:00 ET (08:00 GMT)

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