Shell Absorbs Charges, Pauses Project: Q2 Outlook Dims With Impairments and Biofuels Halt

Shell plc SHEL shares are trading higher premarket today. The British energy company updated its operational outlook for the second quarter of FY24.

The company expects to incur non-cash post tax impairments of $1.5 – $2 billion in the quarter, including $0.6 billion – $0.8 billion in Singapore Chemicals & Products assets and $0.6 billion – $1.0 billion in Rotterdam HEFA assets.

Notably, this week, Shell stated that it is temporarily pausing construction at its 820,000 tonnes-per-year biofuels facility in Rotterdam to address project delivery and ensure future competitiveness amid current market conditions.

Outlook Revised: For Integrated Gas, the company updated the production outlook to be 940 – 980 thousand boe/d (vs. 920 – 980 thousand boe/d expected earlier) and LNG liquefaction volumes to 6.8 – 7.2 MT (vs. 6.8 – 7.4 MT prior).

Read: Shell Secures Major LNG Deal With Temasek’s Pavilion Energy: Details

The outlook reflects that Trading and optimisation results are expected to be in line with second-quarter FY23 but lower than first-quarter FY24 due to seasonality.

For Upstream, Shell narrowed production guidance to 1,720 – 1,820 thousand boe/d (vs. 1,630 – 1,830 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.

For Marketing, the company lowered the high end of the sales volume guidance, with the revised range at 2,700 – 3,100 thousand b/d (vs. 2,700 – 3,200 projected earlier).

For Chemicals & Products, Shell currently sees refinery utilization of 91% – 95% (vs. 87% – 95% earlier), reflecting planned maintenance activities in North America and Chemicals utilization of 78% – 82% (vs. 72% – 80% prior).

The company projects Chemicals sub-segment adjusted earnings to be close to break-even in second-quarter FY24.

Shell stock has gained around 22% in the last 12 months. Investors can gain exposure to the stock via Direxion Hydrogen ETF HJEN and VanEck Natural Resources ETF HAP.

Also Read: Shell Pauses European Biofuels Facility Construction, Reviews Project Economics

Price Action: SHEL shares are up 1.21% at $73.89 premarket at the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image by siam.pukkato via Shutterstock

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