Shell sees weaker Q2 trading, lower output across gas and upstream units

July 07, 2025 04:43 PM AEST | By EODHD

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Shell sees weaker Q2 trading, lower output across gas and upstream units — Image source: Kalkine Media

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Investing.com -- Shell Plc (LON:SHEL) (AS:SHEL) on Monday said it expects a weaker second quarter driven by lower trading performance in its Integrated Gas and Chemicals and Products segments. Integrated Gas production is projected between 900,000 and 940,000 barrels of oil equivalent per day (kboe/d), down from 927,000 kboe/d in the first quarter. Liquefied natural gas liquefaction volumes are forecast between 6.4 million and 6.8 million tonnes, compared with 6.6 million tonnes in the prior period. The expected tax charge for the segment ranges from $300 million to $600 million, below the $800 million posted in the first quarter. In the Upstream segment, production is forecast between 1.66 million and 1.76 million kboe/d, compared to 1.855 million kboe/d in the previous quarter.

The reduction reflects scheduled maintenance and the completed sale of the Shell Petroleum Development Company. Exploration well write-offs and the share of profit or loss from joint ventures and associates are each expected to be about $200 million. The taxation charge is estimated between $1.6 billion and $2.4 billion, compared to $2.6 billion last quarter. Marketing adjusted earnings are expected to be higher than in the first quarter. Sales volumes are projected between 2.6 million and 3 million barrels per day, slightly below the 2.674 million recorded previously.

Pre-tax depreciation is estimated between $500 million and $700 million, with a tax charge between $200 million and $600 million. Operating expenses are forecast between $2.3 billion and $2.7 billion, compared to $2.4 billion in the prior quarter. In Chemicals and Products, Shell expects refining margins to rise to $8.9 per barrel from $6.2 per barrel. Indicative chemicals margins are forecast at $166 per tonne, up from $126 per tonne. Despite these increases, adjusted earnings are expected to fall below break-even.

Refinery utilization is projected between 92% and 96%, compared to 85% in the first quarter. Chemicals utilization is expected to decline to between 68% and 72%, from 81%, due to maintenance at the Monaca site. Operating expenses are projected between $1.7 billion and $2.1 billion. The Renewables and Energy Solutions segment is expected to report adjusted earnings between a $400 million loss and a $200 million profit. Trading and optimisation activity is expected to decline from the previous quarter.

There is no updated production or utilization guidance for this segment. Corporate adjusted earnings are expected to remain negative, with a forecast loss between $400 million and $600 million, compared to a $500 million loss in the previous quarter. Group-level tax payments are projected between $2.8 billion and $3.6 billion. Derivative movements are forecast to range from a loss of $1 billion to a gain of $3 billion, while working capital changes are expected to range from a decrease of $1 billion to an increase of $4 billion.

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