Shell’s first-quarter update compares well to the fourth quarter, which was a strong one for the oil giant.
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Shell
stock climbed Thursday after the oil giant reassured the market with a positive first-quarter update.
Shell (ticker: SHEL.U.K.), the London-listed oil-and-gas company, said the performance of its oil products division in the first three months is expected to be “significantly higher” than in the fourth quarter of 2022. Its marketing unit results are also set to be higher, the company added.
Integrated gas earnings will be at a similar level to the fourth quarter, Shell estimated. The previous quarter wrapped up a stellar year for the company, in which it posted a record annual profit of $40 billion.
The fourth quarter was a strong one for Shell, so expectations for the first quarter to be better, or similar, in a number of areas—even with lower oil and gas prices—were being welcomed by investors. The stock climbed 1.8% in London trading, while the American depositary receipts were 1.1% higher in premarket trading.
Shell also expects to produce more gas than in the previous quarter. Integrated gas production is set to rise to between 930,000 and 970,000 barrels of oil equivalent a day in the first quarter, from 917,000 in the fourth quarter of 2022.
Liquefied natural gas (LNG) volumes are also seen rising to a range between 7 million to 7.4 million metric tons, from 6.8 million in the previous quarter.
The update showed “encouraging signs” for Shell, RBC Europe analysts said in a note Thursday, maintaining an Outperform rating and a £29 ($36) price target, a 21% upside to Thursday’s price.
“Another strong quarter for LNG trading is of course positive, however more importantly Shell is starting to show some operational momentum, and nudged up its liquefaction guidance for the first time in a while,” said the analysts, led by Biraj Borkhataria.
Shell’s renewables unit is expected to contribute between $100 million and $700 million to earnings, compared with $300 million in the last quarter.
However, the company expects to report an adjusted loss of up to $1.2 billion in its corporate division.
Write to Callum Keown at [email protected]
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