Shell reported steady performance ahead of its Q2 results, though expects “significantly less” trading revenues from its gas unit and slim profitability for its renewables business.
In a trading update issued on Friday the supermajor (LON:SHEL) said it expects upstream production of around 1.65-1.75 million barrels per day, down marginally on the 1.87 million seen in Q1 2023.
The group said this reflects scheduled maintenance, including assets in the Gulf of Mexico, Norway, Malaysia and Brazil.
Its underlying upstream operating expenditure also held steady at $2.1- 2.5bn, alongside roughly $200m in exploration write offs.
Gas production too is forecast to remain steady at 950,000-990,000 barrels of oil equivalent (boepd), though it warned trading and optimisation is forecast to be “significantly lower” compared to a strong Q1 due to seasonality and fewer optimisation opportunities.
Shell said Q2 results for the unit are set to be in line with the average for the quarter in previous years.
Indicative refining margins for its chemicals and products unit are expected to fall sharply from $15/bbl last quarter to $9/bbl for the previous three months, again amid lower trading and optimisation.
It’s also nearly half the $19/bbl margin reported in Q4 2022.
Exxon too announced a $4bn earnings hit on lower gas prices and refining margins.
Meanwhile its renewables and energy solutions business suffers a mixed outlook, with results ranging from a $300m loss to $300m profit.
It comes as Shell’s retail arm Shell Energy, serving customers in Germany, the Netherlands and UK is put up for sale, following a strategic review earlier this year. The company supplies around 1.4m customers.
It comes amid considerable turmoil over the company’s clean energy strategy, as both its renewable energy VP and its head of UK offshore wind have departed the group in recent weeks, while CEO Wael Sawan has vowed to focus only on the most profitable projects.
In a BBC interview published on Thursday Mr Sawan, who took the helm at the London-headquartered supermajor at the start of this year, said the world still “desperately needs oil and gas” as cleaner sources could not be brought online fast enough to meet demand.
Challenged over whether prolonging oil and gas production would help society’s most vulnerable, he added: “What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again.”
Full Q2 results are expected to be published on July 27.
Recommended for you
