Shell’s fourth-quarter earnings teaser has left investors disappointed as shares fall on the news tougher conditions will continue for the oil major.
Shell shares were down 1.5% in early trading after the company said gas production would be lower due to maintenance in Qatar, leading to possible lower earnings for the division.
After recording gas production of 941 kboe/d in Q3, Shell now expects production to fall into the range of 880 – 920 kboe/d in Q4. This will come as a blow to investors, given integrated gas was Shell’s biggest contributor to adjusted earnings in Q3.
“Shell has revised its outlook for Liquefied Natural Gas (LNG) production in the fourth quarter, as oil and gas prices remain under pressure following a challenging year for fossil fuels. The oil giant’s chemicals and oil products division is also expected to report a decline in Q4, signalling a broader slump in its performance as it prepares to release earnings in the coming weeks,” said Mark Crouch, market analyst at investment platform eToro.
Shell, like all oil majors, has experienced difficult trading conditions due to lower energy prices that are showing little sign of recovery in the near term.
Those positioning for Shell’s green energy transition will also be perturbed the company is slowing commitments to offshore wind. Shell has a substantial clean energy business, yet it still pales into insignificant to the fossil fuel units.
“Additionally, Shell has announced that it is stepping back from new offshore wind investments,” Crouch said.
“This move raises questions about the long-term viability of windfarms as a practical investment for the company’s shareholders, especially under the leadership of CEO Wael Sawan. Sawan’s relentless focus on pursuing projects that generate value for investors seems to prioritise short-term returns over longer-term renewable energy commitments.”