Shell expects 'significantly lower' gas trading results in Q1 following bumper performance in Q4

By Louis Goss

Shell on Friday said it expects results from its gas and power trading business will be "significantly lower" in the first quarter of 2024 than the "exceptional" results it posted in the fourth quarter of 2023 that previously bolstered its bottom line.

The London headquartered oil major said it expects a dip in results from its trading and optimisation business, following a bumper set of results from the segment in the fourth quarter due to surging demand for LNG.

"Trading & Optimisation results are expected to be strong, but significantly lower than an exceptional Q4'23," Shell said in a trading update as it prepares to publish its first quarter results on May 2.

Shell's (UK:SHEL) London listed shares increased slightly on Friday having advanced by 17% over the previous 12 months.

In the final quarter of last year, Shell posted a bumper performance from its gas trading business that saw it generate $4 billion in adjusted earnings from its integrated gas unit, by selling 18.09 million tonnes of LNG.

The strong fourth quarter performance helped Shell offset the negative impacts of slumping oil and gas prices and saw the company hike its dividend and launch a $3.5 billion share buyback program that helped lift its share price in February this year.

In its trading update, Shell also narrowed its guidance for sales from its integrated gas business towards the upper end of previous estimates, stating it now expects to sell 7.2-7.6 million tonnes of LNG in the first quarter, compared to its previous range 7.0- 7.6 mt.

The company revised its guidance for production from its upstream business from a previous figure of 1,834 thousand barrels of oil equivalent per day (kboe/d) to 1,820-1,920 kboe/d.

Analysts from RBC, led by Biraj Borkhataria, said Shell's update was overall "positive" considering the revised integrated gas and upstream guidance, as they said the oil major's statements around its trading business sit in-line with their own forecasts.

-Louis Goss

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-05-24 0618ET

Copyright (c) 2024 Dow Jones & Company, Inc.