Shell Plc has announced that its earnings from natural gas trading in the second quarter will be significantly lower, primarily due to seasonal shifts in the market. The company also expects a decrease in oil and gas production compared to the first quarter as field maintenance activities take place. Furthermore, Shell anticipates a loss in its chemicals business. These preliminary updates were provided ahead of the company’s full results, which will be released later this month.
Last year, Shell benefited from extreme swings in European natural gas prices, leading to record profits, with the trading unit contributing a significant portion of overall profitability. Although the company achieved its best-ever first quarter this year, the subsequent months presented less favorable conditions.
Shell stated that earnings from the natural gas trading unit are expected to be notably lower compared to the strong first quarter as seasonality and reduced optimization opportunities impact performance. The division’s results are returning to the average levels observed in 2021 and 2022.
Biraj Borkhataria, an analyst at RBC Europe Ltd., noted that the weaker trading outcome was anticipated following exceptional results in recent quarters. Overall, Borkhataria views Shell’s statement as neutral since most operational indicators align with market expectations.
Meanwhile, Shell’s US counterpart, Exxon Mobil Corp., disclosed that its second-quarter earnings would decrease by approximately $4 billion compared to the first three months of the year. This reduction is attributed to lower natural gas prices and oil refining margins. Exxon Mobil is actively seeking to develop its trading business to compete with European majors like Shell.
In early trading in London, Shell’s shares experienced a slight decline. The full details of the company’s second-quarter performance will be revealed later this month, providing a comprehensive view of its financial standing.