Shell 1Q Earnings Rose More Than Expected -- Update
April 29 2021 - 02:45AM
Dow Jones News
--Shell's earnings increased above market views in the first
quarter, reflecting stronger oil and gas prices and chemicals and
refining margins
--Net debt was slashed by $4 billion as cash flows were also
better than expected
--Second-quarter production is forecast to fall for both the
integrated gas and upstream segments
By Jaime Llinares Taboada
Royal Dutch Shell PLC on Thursday reported improved earnings for
the first quarter of the year, as oil and gas prices continued
their recovery.
The Anglo-Dutch energy major posted adjusted earnings on a
current cost of supply basis of $3.23 billion for the period, up
from $393 million in the fourth quarter of 2020 and $2.86 billion a
year earlier. This is a metric similar to the net income that U.S.
oil companies report, but strips out exceptional items.
"Compared with the fourth quarter 2020, current quarter adjusted
earnings reflected higher realized oil and LNG prices, chemicals
and refining margins, oil products trading contributions and lower
depreciation," Shell said.
Adjusted CCS earnings came in above the $3.12 billion market
consensus, taken from Vara Research and based on 24 brokers'
estimates.
Shell swung to a net profit of $5.66 billion in the quarter,
from a $4.01 billion loss in the fourth quarter of 2020.
Cash flow from operations was also higher than expected. It
totaled $8.29 billion in the period, beating the $7.51 billion
market consensus--taken from Vara and based on 17 forecasts.
As a result, net debt was reduced by $4.1 billion during the
quarter, to $71.3 billion on March 31. Shell has a target to reduce
net debt to $65 billion before distributing 20%-30% of cash flow
from operations to shareholders through dividends and share
buybacks.
In addition, Shell forecast that its second-quarter integrated
gas production will sit between 880,000 oil-equivalent barrels a
day and 940,000 oil-equivalent barrels a day, with liquefied
natural gas volumes of 7.6 million tons-8.2 million tons. This
would be down from 967,000 barrels and 8.2 million tons in the
first quarter.
Upstream production for the second quarter is also expected to
fall, to 2.15 million barrels a day-2.35 million barrels a day,
from 2.46 million in the first quarter.
Second-quarter oil products sales are forecast at 4.0 million
barrels a day-5.0 million barrels a day, while chemicals volumes
are expected to be between 3.5 million tons and 3.8 million
tons.
The company declared a dividend of $0.1735 a share for the
period, up from $0.1665 in the fourth quarter and $0.16 a year
earlier.
Shares at 0714 GMT were up 22.4 pence, or 1.6%, at 1,404.6
pence.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
April 29, 2021 03:30 ET (07:30 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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