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Shell Shares Decline as a Fall in Refining Margins Impacts Q3

Sam Boughedda trader
Updated 6 Oct 2022

Buy Shell Shares Your Capital Is At Risk

Key points:

  • Shell reported a third-quarter trading update
  • EBITDA is expected to be impacted by a fall in refining margins
  • Shell shares declined 3% following the update

Shell (LON: SHEL) shares are down in early Thursday trading after the company provided a third-quarter update on Thursday, telling investors that third-quarter EBITDA is expected to be negatively impacted by a fall in refining margins.

In addition, Shell said trading and optimisation results for integrated gas are expected to be “significantly lower” compared to the previous quarter due to seasonality and significant “differences between paper and physical realisation in a volatile and dislocated market.”

Also Read: What Is the Impact of Changing Oil Prices?

It marks a change from the year's first two quarters for the British energy giant, which previously reported two consecutive quarters of record profits as oil and gas prices surged.

However, indicative refining margin fell to $15 per barrel in the third quarter, compared to $28 per barrel in the second quarter. Shell stated the decrease is expected to have a negative impact of between $1 billion and $1.4 billion on its third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA).

Third quarter production is expected to be between 890 and 940 thousand barrels of oil equivalent per day.

Shell shares have rallied for most of 2022, rising over 38%. However, on Thursday, following the third quarter trading update, they are down over 3%.

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.