Shell Plc said second-quarter results will be undermined by a weaker performance from the energy giant’s fabled oil and gas trading operation.
Earnings from the division are expected to be “significantly lower” quarter-on-quarter, the London-based company said Monday in a statement, which prompted a decline in its shares to a four-week low.
Shell’s sprawling but secretive in-house trading business is often one of its biggest profit boosters, and Chief Executive Officer Wael Sawan said in March that its traders haven’t lost money in a single quarter over the past decade. Yet recent price swings have been hard to navigate, with crude whipsawed by US President Donald Trump’s trade war, OPEC+ policy and Israel’s attacks on Iran.
The nature of last quarter’s volatility — driven more by geopolitics than by supply and demand fundamentals — was challenging, a person familiar with the matter said.
Shell slid as much as 3.3% in London trading, and was down 2.9% at 2,552.5 pence as of 11:32 a.m. local time. European peers BP Plc and TotalEnergies SE, which also have large trading operations, fell too.
‘Disappointing’ Update
The weaker contribution from trading eroded an increase in margins from refining and chemicals, though the latter division is nevertheless expected to report a loss when Shell publishes results in late July.
Monday’s update “does show how levered the company is to trading volatility,” Biraj Borkhataria, an analyst at RBC Europe Ltd., said in a note. “This is a disappointing update,” though “we do not expect this to alter the longer-term thesis.”
Sawan has focused on cutting costs, boosting reliability and shedding underperforming assets in an effort to close a valuation gap between Shell and its US competitors. The strategy, which prioritizes the core oil and gas business and shareholder returns, has helped the stock outperform rivals this year but left questions regarding future oil-production growth.
Output dropped by almost 100,000 barrels a day from the first quarter, largely reflecting the sale of Shell’s onshore Nigeria subsidiary and planned maintenance. The company had already notified investors of its production expectations.
Shell is the world’s biggest trader of liquefied natural gas, and has forecast that global demand for the fuel will grow about 60% by 2040. Its LNG Canada project, which began exporting in recent weeks, is one of a slew of new ventures coming online globally in the next few years. Liquefaction volumes in the second quarter were in line with the first.
Shell’s trading update comes less than two weeks after the company said it had no intention of making an offer for UK competitor BP. Its announcement quelled a long period of speculation and tied its hands for the next six months under UK takeover rules.
The company is scheduled to report second-quarter results July 31.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
element
var scriptTag = document.createElement(‘script’);
scriptTag.src = url;
scriptTag.async = true;
scriptTag.onload = implementationCode;
scriptTag.onreadystatechange = implementationCode;
location.appendChild(scriptTag);
};
var div = document.getElementById(‘rigzonelogo’);
div.innerHTML += ” +
‘
‘ +
”;
var initJobSearch = function () {
//console.log(“call back”);
}
var addMetaPixel = function () {
if (-1 > -1 || -1 > -1) {
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
} else if (0 > -1 && 78 > -1)
{
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
}
}
// function gtmFunctionForLayout()
// {
//loadJS(“https://www.googletagmanager.com/gtag/js?id=G-K6ZDLWV6VX”, initJobSearch, document.body);
//}
// window.onload = (e => {
// setTimeout(
// function () {
// document.addEventListener(“DOMContentLoaded”, function () {
// // Select all anchor elements with class ‘ui-tabs-anchor’
// const anchors = document.querySelectorAll(‘a .ui-tabs-anchor’);
// // Loop through each anchor and remove the role attribute if it is set to “presentation”
// anchors.forEach(anchor => {
// if (anchor.getAttribute(‘role’) === ‘presentation’) {
// anchor.removeAttribute(‘role’);
// }
// });
// });
// }
// , 200);
//});
