Shell announced on Friday that it foresees booking after-tax impairments of up to $3 billion for the second quarter of 2023. Additionally, the energy giant expects a decrease in upstream production compared to the previous quarter.
The anticipated post-tax impairments, largely attributed to a 1% hike in the discount rate used for impairment testing, are estimated to reach up to $3 billion.
In terms of production, Shell predicts a decline from 1.9 million barrels of oil equivalent (BOE) per day in the first quarter to a range of 1.7 million-1.8 million BOE per day in the second quarter. This dip can be attributed to scheduled maintenance activities, specifically affecting assets located in the Gulf of Mexico, Norway, Malaysia, and Brazil.
Shell Energy Update
Integrated Gas Division
Shell has reported that its integrated gas division has seen a slight decrease in production during the quarter. The company’s daily production for this division ranged between 950,000 and 990,000 barrels of oil equivalent (BOE) per day, compared to 970,000 BOE per day in the previous quarter. Additionally, the liquefied natural gas (LNG) liquefaction volumes for this unit were in the range of 6.9 to 7.3 million metric tons, slightly lower than the previous quarter’s volume of 7.3 million tons.
Shell anticipates lower trading activity in the integrated gas division due to seasonal factors and fewer optimization opportunities. Despite this, the company remains committed to delivering efficient and effective operations within this division.
Market Division
In the market division, Shell expects to report sales volumes ranging from 2.4 to 2.8 million barrels per day. This is comparable to the sales volume of 2.45 million barrels per day achieved in the previous quarter.
Overall, Shell continues to demonstrate its strong presence and expertise in the energy market. With its unwavering commitment to excellence, the company strives to deliver optimal results across its various divisions.
Company Guidance Indicates Working Capital Gain
The company is expecting to achieve a remarkable working capital gain of $2 to $6 billion. This is a significant improvement compared to the working capital requirement of $800,000 in the previous quarter. As a result, the company’s net debt is expected to decrease quarter-on-quarter.
Positive Impact on Shell’s Statements
Shell’s positive financial progress is expected to boost investor confidence, especially regarding their commitment to buybacks totaling at least $5 billion in the second half of the year. RBC Capital Markets analyst, Biraj Borkhataria, highlighted this promising outlook in a research note.