Copyright © BusinessAMBE 2023

Shell, the oil and gas giant, has previewed its results for the fourth quarter of 2023. Although the company saw its earnings drop quite a bit, it points out that this is not a problem: the company's gas business is soaring.

Although Shell is helped by the war in Ukraine, good gas exports alone are not enough to bring out the worse numbers for oil and chemicals. At the same time, the preliminary Q4 result is not surprising: it is indicative of the sector.

In the news: Shell incurs a big loss, but is very optimistic about the past quarter

  • The chemicals and oil sectors are struggling, and Shell is no different. Revenues for the oil and gas giant took a solid dive, with between $2.5 billion and $4.5 billion less in revenue. This was what was expected.
  • According to Shell, this decline has to do with a weak oil market and poor portfolio choices. Consequently, it wants to get rid of its chemical production arm in Singapore. Shell's oil and chemical production units are therefore heading for a loss.
  • But according to the company, the results are not so bad: it sees gas trading up significantly. It drove up production. Measured in oil barrels, Shell produced 880,000 to 920,000 barrels a day. Shell also raised its prospects for liquefied natural gas (LNG) production: it adjusted the lower limit from 6.7 million to 6.9 million tons, while the upper limit remains at 7.3 tons.
    • The good results for gas trading can be explained by the war in Ukraine and the volatility in prices as a result.

Quoted: "We see this statement as neutral."

  • Analysts had been expecting this. Biraj Borkhatari, analyst for Royal Bank of Canada in Europe, is neither blowing hot nor cold on the news, according to Bloomberg: "Overall, we see the statement as neutral, given the reasonable operating result. However, earnings continue to be impacted by weak performance of the chemicals division."
  • Borkhatari also called Shell's lower oil trading results "typical" for this period due to "lower liquidity and volatility."

Shell also gets hit on stock market

The stock market reaction: concerns after all?

  • On the British stock market, Shell's shares did fall back for a while after opening: they first went down in a sharp line, before rising slightly again and stabilizing. The stock lost about 2 percent today as this article appeared.
  • So investors still reacted somewhat shocked after hearing Shell's financial results, despite the analysts' neutral view.
  • The price of a barrel of Brent crude oil currently stands at $77.7, down 1.35 percent.

Also note: Shell must pay for emissions

  • Shell further noted that it recently had to pay $900 million in costs due to emissions, something that did not benefit the company either.
    • At the same time, Shell showed itself to be a cool lover of carbon offsets. It conducted a project around that.

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