Stronger Energy Prices Boosted Shell's Earnings in 2Q -- Commodity Comment

By Jaime Llinares Taboada

Shell on Thursday reported that its adjusted earnings rose in the second quarter. Here's what the oil-and-gas major had to say:

On Integrated Gas

"Compared with the first quarter 2021, Integrated Gas Adjusted Earnings primarily reflected higher realized prices for LNG, oil and gas, lower comparative operating expenses due to credit provisions in the first quarter 2021 and favorable deferred tax movements."

"Compared with the first quarter 2021, total oil and gas production decreased by 3% mainly due to higher maintenance activities and field decline, partly offset by production sharing contract effects."

"LNG liquefaction volumes decreased by 8% due to higher maintenance activities and feedgas constraints."

On Upstream:

"Compared with the first quarter 2021, Upstream Adjusted Earnings reflected higher realized oil prices, and the one-off release of a tax provision in Nigeria of $628 million."

"Compared with the first quarter 2021, total production decreased by 8%, mainly due to unfavorable seasonal effects and higher maintenance activities."

On oil products:

"Compared with the first quarter 2021, Oil Products Adjusted Earnings reflected higher Retail margins, and higher contributions from trading and optimization, partly offset by higher operating expenses driven by recovery in sales volumes."

"Oil Products sales volumes increased due to higher demand and favorable seasonal effects."

"Refining & Trading Adjusted Earnings reflected higher realized refining margins (while Refining Adjusted Earnings still being negative), higher contributions from trading and optimization and lower depreciation."

"Marketing Adjusted Earnings reflected higher Retail margins partly offset by higher operating expenses driven by recovery in sales volumes."

On Chemicals:

"Compared with the first quarter 2021, Chemicals Adjusted Earnings reflected higher base chemicals margins, partly offset by lower intermediate margins, and higher operating expenses due to maintenance phasing."

"Chemicals manufacturing plant utilization was 82% compared with 79% in the first quarter 2021, due to lower unplanned downtime."

On 3Q outlook:

"Due to the impact of maintenance activities, Integrated Gas production is expected to be approximately 870 - 920 thousand boe/d and LNG liquefaction volumes are expected to be approximately 7.4 - 8.0 million [metric] tons."

"Upstream production is expected to be approximately 2,100 - 2,250 thousand boe/d."

"Refinery utilization is expected to be approximately 73% - 81%."

"Oil Products sales volumes are expected to be approximately 4,300 - 5,300 thousand b/d."

"Chemicals manufacturing plant utilization is expected to be approximately 77% - 85%."

"Chemicals sales volumes are expected to be approximately 3,600 - 3,900 thousand tons."

"Corporate Adjusted Earnings are expected to be a net expense of approximately $600 - $700 million in the third quarter 2021 and a net expense of approximately $2,300 - $2,600 million for the full year 2021."

Write to Jaime Llinares Taboada at [e-mail]; @JaimeLlinaresT

(END) Dow Jones Newswires

July 29, 2021 02:52 ET (06:52 GMT)

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