Shell Swings to Loss, Raises Dividend -- Commodity Comment

By David Hodari

Royal Dutch Shell PLC, one of the world's largest oil-and-gas companies, released its fourth quarter 2020 results Thursday, which revealed an 87% drop in earnings. The company blamed the economic impact of the coronavirus pandemic, which hammered oil demand and with it oil prices and refining margins.

While the company raised its dividend, its shares were last down 1.4% at GBP13.18. Here are some more remarks from Shell's report:

On Gas:

"Compared with the fourth quarter 2019, Integrated Gas Adjusted Earnings of $1,109 million primarily reflected lower realised prices for LNG, oil and gas and lower contributions from trading and optimisation, partly offset by lower operating expenses... Compared with the full year 2019, total oil and gas production decreased by 1% mainly due to more maintenance activities and lower wells performance"

On Upstream:

"Compared with the fourth quarter 2019, Upstream Adjusted Earnings were a loss of $748 million, reflecting lower oil and gas prices, lower production volumes mainly driven by hurricanes affecting US Gulf of Mexico production and OPEC+ restrictions, and unfavourable deferred tax movements... total production decreased by 10%, mainly due to the impact of divestments, lower production in the NAM joint venture, OPEC+ restrictions and higher maintenance. New fields and ramp-ups, mainly in Brazil, offset the impact of field declines."

On Refined Products:

"Compared with the full year 2019, Oil Products Adjusted Earnings of $5,995 million reflected lower realised refining margins and lower marketing sales volumes due to the weak macroeconomic environment and the COVID-19 pandemic. These were partly offset by lower operating expenses, contributions from crude and oil products trading and optimisation, and favourable deferred tax movements."

On 1Q 2021:

"As a result of the COVID-19 pandemic, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products... Due to demand or regulatory requirements and/or constraints in infrastructure, Shell may need to take measures to curtail or reduce oil and/or gas production, LNG liquefaction as well as utilisation of refining and chemicals plants and similarly sales volumes could be impacted. Such measures will likely have a variety of impacts on our operational and financial metrics."

On Debt:

"Net debt was $75.4 billion at the end of the fourth quarter 2020, compared with $73.5 billion at the end of the third quarter 2020, mainly driven by lower free cash flow generation and by lease additions, partly offset by favourable foreign currency exchange translation differences."

Shell CEO Ben van Beurden on 2020:

"2020 was an extraordinary year. We have taken tough but decisive actions and demonstrated highly resilient operational delivery... We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy. We are committed to our progressive dividend policy and expect to grow our US dollar dividend per share by around 4% as of the first quarter 2021."

Write to David Hodari at [e-mail].

(END) Dow Jones Newswires

February 04, 2021 06:08 ET (11:08 GMT)

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