April 11, 2023 [NGI Natural Gas Intelligence] – The return of LNG volumes in Australia, as well as stable natural gas and oil trading, should boost Shell plc’s results in the first quarter, the integrated major said.
Liquefied natural gas volumes are forecast to climb to 7.0-7.4 million metric tons (MT) in 1Q2023 from 6.8 MT in 4Q2022.
Shell, in a preview of 1Q2023 results, credited “higher uptime” in Australia at the Prelude floating LNG facility and at the Queensland Curtis LNG facility. The gains translate to a 6% sequential increase in liquefaction volumes.
Integrated Gas production also is forecast to be higher sequentially.
Output in 1Q2023 is expected to average 930,000-970,000 boe/d at the midpoint. Production at the midpoint averaged 917,000 boe/d in 4Q2022, brought lower by the downtime in Australia. During 3Q2022, volumes had averaged 924,000 boe/d.
In the Upstream division overall, output inched up 0.5% at the midpoint of guidance from 4Q2022. Production is expected to average 1.80-1.90 million boe/d from sequential output of 1.86 million boe.
In the Oil Products division, profits could climb because of “significantly higher” trading performance, Shell said. In the Trading & Optimization results, refining margins are set to weaken sequentially, down 21% sequentially.
The Renewables unit’s adjusted earnings are set to contribute $100-700 million for the first three months, compared to $300 million in 4Q2022.
Chemical margins grew sequentially from 4Q2022, but Shell warned realized profits may be adversely impacted by delays at the Pennsylvania ethane cracker. The cracker is designed to produce 1.5 million metric tons/year (mmty) of ethylene and 1.6 mmty of polyethylene.
“The 1Q2023 realized chemicals margin is expected to be below $100/metric ton, mainly due to lower utilization from slower than expected ramp-up of Shell Polymers Monaca (US),” Shell stated.
Shell is scheduled to issue its first quarter results on May 4.
The quarterly update “points towards steady positive trading results in Integrated Gas, alongside outperformance in the portfolio,” Tudor, Pickering, Holt & Co. (TPH) analysts said. The first quarter results are “supported by better-than-expected operational expenditures across various segments and improved trading results in oil.”
In the Integrated Gas segment, “upstream guidance suggested modest upside versus our prior estimates,” the TPH analysts said. Liquefaction guidance is “tracking well similarly…further supporting trading performance in-line quarter/quarter, following positive trends into fourth quarter results…”
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