Oil Giant Shell Tweaks Q4 Outlook, Shocks Shares With Around $4.5B Impairment Charge

Zinger Key Points
  • Shell revises Q4 FY23 outlook with higher gas production but increased impairment charges.
  • Shell discloses Q4 impairment charges of $2.5B-$4.5B, linked to macro & external developments as well as portfolio choices.

Shell PLC SHEL shares are trading lower after it revised its Q4 FY23 operational outlook.

For Integrated Gas, the company updated the production outlook to be 880-920 thousand boe/d (vs. 870-930 thousand boe/d expected earlier) and LNG liquefaction volumes to 6.9 - 7.3 MT (vs. 6.7 - 7.3 MT expected earlier)

The revised outlook reflects significantly higher Q/Q Trading & Optimisation owing to seasonality and increased optimisation opportunities.

For Upstream, Shell narrowed production guidance to 1,830-1,930 thousand boe/d (vs. 1,750-1,950 thousand boe/d earlier), with shares of profit / (loss) of joint ventures and associates expected to be ~$0.2 billion and exploration well-write offs projected to be ~$0.2 billion.

Also ReadEnergizing Partnerships: QatarEnergy's First-Ever Five-Year Crude Sales Agreement With Shell

For marketing, the company increased the lower end of the sales volume guidance to 2,350 - 2,750 thousand b/d (vs. 2,250 - 2,750 projected earlier).

For Chemicals & Products, Shell currently sees refinery utilization of 78% - 82% (vs. 75% - 83% earlier), reflecting planned maintenance activities in North America and Chemicals utilization of 60% - 64% (vs. 62% - 70% prior).

The Chemicals & Products segment is projected to witness an adjusted earnings loss in Q4 FY23.

Also Read:  Oil Giants Shell & Equinor Reach Sparta Investment Decision: Set To Boost Gulf Of Mexico Oil Output

Overall, Shell disclosed impairment charges of about $2.5 billion to $4.5 billion in Q4. The impairments are primarily driven by macro & external developments and portfolio choices, including the Singapore Chemicals & Products assets.

The company expects to release Q4 FY23 results on January 8, 2024.

In November, SHEL reported a third-quarter FY23 revenue decline of 20.3% year-over-year to $76.35 billion, missing the consensus of $82.96 billion. Adjusted earnings per ADS for the quarter was $1.86, above the consensus of $1.83.

Price Action: SHEL shares are trading lower by 1.08% at $65.02 premarket on the last check Monday.

Photo via Company

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