Shell’s Earnings From Gas Trading to Drop Significantly

(Bloomberg) -- Shell Plc’s earnings from natural gas trading will be significantly lower in the second quarter, due to seasonal shifts in the market. 

Oil and gas production will also be down compared with the first three months of the year due to field maintenance, while the company’s chemicals business is expected to post a loss, Shell said in an update ahead of its full results later this month. 

Extreme swings in European natural gas prices last year helped propel Shell’s profits to record levels, with trading in the unit accounting for as much as a quarter of overall profitability. The strong performance continued into this year, helping the company deliver its best-ever first quarter, but conditions were less advantageous in the following months.

Shares were slightly lower in early trading in London. 

Earnings from the unit are “expected to be significantly lower compared to a strong first quarter due to seasonality and fewer optimization opportunities,” Shell said in a statement. The division’s performance returned to average levels seen in 2021 and 2022. 

The weaker trading outcome was expected after exceptional results in recent quarters, according to Biraj Borkhataria, an analyst at RBC Europe Ltd. “Overall, we see the statement as neutral given most operational indicators are looking in line with market expectations,” he wrote in a note.

Shell’s US peer Exxon Mobil Corp. has said that its second-quarter earnings will be reduced by about $4 billion compared to the first three months of the year because of lower natural gas prices and oil-refining margins. The US major is seeking to build up a trading business to compete with European majors like Shell. 

(Adds shares in fourth paragraph)

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