Shell 3Q Adjusted Earnings Fell as Hurricane Ida Hurt Business -- Update
28 October 2021 - 7:10PM
Dow Jones News
By Jaime Llinares Taboada
Royal Dutch Shell PLC on Thursday reported that its earnings
fell 25% in the third quarter after Hurricane Ida hurt its
operations in the Gulf of Mexico.
The Anglo-Dutch oil-and-gas major said its adjusted earnings
were $4.13 billion for the period, down from $5.53 billion in the
second quarter and below market expectations of $5.31 billion,
provided by Vara Research and averaged from 22 analysts'
estimates.
Shell said lower earnings reflected one-off tax impacts, lower
production volumes partly due to the effect of Hurricane Ida, and
lower contributions from trading and optimization. Overall, Shell
estimates that the hurricane had an adverse effect of around $400
million on adjusted earnings.
This was partly offset by stronger oil, liquefied natural gas
and gas prices.
Total production available for sale in the quarter fell 6% to
3.07 million oil-equivalent barrels a day.
However, cash flow from operations rose 27% to $16.03 billion,
mainly driven by a positive impact of $4.0 billion from commodity
derivatives.
The company reported a net loss of $447 million for the quarter,
which included noncash charges of $5.2 billion due to the fair
value accounting of commodity derivatives, swinging from a $3.43
billion net profit for the second quarter.
"Not the cleanest set of results this morning given a number of
one-offs impacting earnings, however from a CFFO [cash flow from
operations] perspective, Shell reported strong results," RBC
Capital Markets analyst Biraj Borkhataria said in a note.
Looking forward, Shell forecast capital expenditure to be around
$20 billion for the whole of 2021.
In the fourth quarter, production from the integrated gas
division is expected to average 940,000-980,000 oil-equivalent
barrels a day, while LNG liquefaction volumes are projected at 8.0
million-8.6 million metric tons, benefiting from lower maintenance
activities. Upstream production is seen at 2.10 million-2.35
million oil-equivalent barrels a day.
The oil products business is expected to deliver sales volumes
of 4.20 million-5.20 million barrels a day, with refinery
utilization of 68%-76%. As for the chemicals division, fourth
quarter plant utilization is expected at 73%-81%, and sales volumes
at 3.50 million-3.90 million tons.
Shell declared a quarterly dividend of $0.24 a share, unchanged
from the second quarter.
Shares at 0739 GMT were down 1.8% at 1,733.8 pence.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
October 28, 2021 03:55 ET (07:55 GMT)
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