Shell Absorbs Charges, Pauses Project: Q2 Outlook Dims With Impairments and Biofuels Halt
Shell plc (NYSE:SHEL) shares are trading higher premarket today. The British energy company updated its operational outlook for the second quarter of FY24.
The company expects to incur non-cash post tax impairments of $1.5 – $2 billion in the quarter, including $0.6 billion – $0.8 billion in Singapore Chemicals & Products assets and $0.6 billion – $1.0 billion in Rotterdam HEFA assets.
Notably, this week, Shell stated that it is temporarily pausing construction at its 820,000 tonnes-per-year biofuels facility in Rotterdam to address project delivery and ensure future competitiveness amid current market conditions.
Outlook Revised: For Integrated Gas, the company updated the production outlook to be 940 – 980 thousand boe/d (vs. 920 – 980 thousand boe/d expected earlier) and LNG liquefaction volumes to 6.8 – 7.2 MT (vs. 6.8 – 7.4 MT prior).
Read: Shell Secures Major LNG Deal With Temasek’s Pavilion Energy: Details
The outlook reflects that Trading and optimisation results are expected to be in line with second-quarter FY23 but lower than first-quarter FY24 due to seasonality.
For Upstream, Shell narrowed production guidance to 1,720 – 1,820 thousand boe/d (vs. 1,630 – 1,830 thousand boe/d earlier), with shares of profit / (loss) of joint ventures and associates expected to be ~$0.2 billion and exploration well-write offs projected to be ~$0.2 billion.
For Marketing, the company lowered the high end of the sales volume guidance, with the revised range at 2,700 – 3,100 thousand b/d (vs. 2,700 – 3,200 projected earlier).
For Chemicals & Products, Shell currently sees refinery utilization of 91% – 95% (vs. 87% – 95% earlier), reflecting planned maintenance activities in North America and Chemicals utilization of 78% – 82% (vs. 72% – 80% prior).
The company projects Chemicals sub-segment adjusted earnings to be close to break-even in second-quarter FY24.
Shell stock has gained around 22% in the last 12 months. Investors can gain exposure to the stock via Direxion Hydrogen ETF (NYSE:HJEN) and VanEck Natural Resources ETF (NYSE:HAP).
Also Read: Shell Pauses European Biofuels Facility Construction, Reviews Project Economics
Price Action: SHEL shares are up 1.21% at $73.89 premarket at the last check Friday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image by siam.pukkato via Shutterstock
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