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

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.

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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.

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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.

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