Shell’s third-quarter update note shows a big step-up in Integrated Gas output after the ARC Resources deal and a much stronger refining margin, while several ranges were trimmed and about $0.3bn of well write-offs were flagged.
Shell (LON: SHEL), the oil and gas major, expects third-quarter Integrated Gas production of 740 to 780 thousand barrels of oil equivalent a day. The update note came at 7am today, before London opened, with full results due on the 29th of October.
The shares closed yesterday at 3,651p, about 21% above their 3,011p close of the 7th of July and just under 3,654.5p on the 28th of September, the highest close in the past year.
The gas range compares with an earlier outlook of 570 to 630, which excluded ARC Resources and Qatar volumes, and 631 in the second quarter. ARC completed on the 2nd of September, so the jump is mostly portfolio rather than organic growth.
Other ranges were narrowed. LNG liquefaction, turning gas into liquid for shipping, is guided at 7.2 to 7.6 million tonnes, against an earlier 7.1 to 7.7 and 7.7 in the second quarter. Upstream production is 1,735 to 1,835 thousand barrels a day, from 1,680 to 1,880, with 1,824 in the second quarter.
The indicative refining margin, the profit from turning crude into fuels, is $42 a barrel, against $24 in the second quarter. Chemicals are weaker at $208 a tonne from $270.
Refinery utilisation is guided at 93% to 97%, down from an earlier 93% to 101% and 102% in the second quarter, with low Rhine water levels hitting the Rheinland refinery. Marketing volumes are 2,550 to 2,650 thousand barrels a day, from 2,550 to 2,750, and marketing earnings are expected to be lower than in the second quarter.
Shell also flagged a charge in its Upstream business, writing:
Q3’26 exploration well write-offs are expected to be ~$0.3 billion.
Shell
Biogas impairments in Marketing are largely offset by an impairment reversal in Integrated Gas. Operating cash flow before working capital includes an outflow of about $2.5bn from the timing of German emissions-certificate payments.
With the shares sitting near their one-year closing high, much of the stronger refining and gas picture may already be in the price. Shell’s company-compiled consensus, gathered by Vara Research, is due on the 21st of October, ahead of results on the 29th.
