Shell reveals mixed outlook for first quarter

Shell shares were in the green on Thursday morning, after it took the wraps off a mixed first quarter outlook.

The FTSE 100 oil giant said that in its integrated gas segment, it expected an increase in production to between 930,000 and 970,000 barrels of oil equivalent per day in the first quarter, up from 917,000 equivalent daily barrels in the fourth quarter of last year.

It also expected higher LNG liquefaction volumes of between seven million and 7.4 million tonnes in the first quarter, driven by increased uptime at Prelude and QGC in Australia.

In the upstream segment, production was to reach between 1,800,000 and 1,900,000 barrels of oil equivalent per day in the first quarter, with underlying operating expenditure estimated at $2.3bn to $2.8bn, down from $3bn in the fourth quarter of 2022.

Pre-tax depreciation was expected to be between $2.8bn and $3.1bn, while the taxation charge is expected to be between $2.4bn and $3.2bn.

In the marketing segment, Shell expected sales volumes to range between 2,250,000 and 2,650,000 barrels per day in the first three months, with underlying opex estimated at $1.8bn to $2.2bn.

The firm also expected higher marketing results than in the final quarter of last year.

In the chemicals and products segment, the indicative refining margin was expected to decrease from $19 to $15 per barrel quarter-on-quarter.

However, the indicative chemicals margin was expected to increase significantly from $37 per tonne to $140 per tonne, despite the chemicals sub-segment adjusted earnings reflecting a loss for the first quarter.

Refinery utilisation was expected to range between 89% and 93%, while chemicals utilisation was expected to be between 70% and 74%.

In the renewables and energy solutions segment, Shell said it expected adjusted earnings of between $0.1bn and $0.7bn in the first quarter, compared to $0.3bn in the fourth quarter of 2022.

For the corporate segment, adjusted earnings were expected to be between -$1.2bn and -$0.9bn in the first quarter, reflecting one-off tax charges.

The Shell group's tax paid was estimated to be between $2.6bn and $3.4bn, down from $4.4bn in the fourth quarter.

Its working capital outlook ranged between -$3bn and $3bn, reflecting uncertainty exacerbated by market volatility in the first quarter.

At 1115 BST, shares in Shell were up 1.84% at 2,406.5p.

Reporting by Josh White for Sharecast.com.