SHEL Shell Plc

By Jaime Llinares Taboada

Royal Dutch Shell PLC on Thursday reported that its earnings fell 25% in the third quarter after Hurricane Ida hurt its operations in the Gulf of Mexico.

The Anglo-Dutch oil-and-gas major said its adjusted earnings were $4.13 billion for the period, down from $5.53 billion in the second quarter and below market expectations of $5.31 billion, provided by Vara Research and averaged from 22 analysts' estimates.

Shell said lower earnings reflected one-off tax impacts, lower production volumes partly due to the effect of Hurricane Ida, and lower contributions from trading and optimization. Overall, Shell estimates that the hurricane had an adverse effect of around $400 million on adjusted earnings.

This was partly offset by stronger oil, liquefied natural gas and gas prices.

Total production available for sale in the quarter fell 6% to 3.07 million oil-equivalent barrels a day.

However, cash flow from operations rose 27% to $16.03 billion, mainly driven by a positive impact of $4.0 billion from commodity derivatives.

The company reported a net loss of $447 million for the quarter, which included noncash charges of $5.2 billion due to the fair value accounting of commodity derivatives, swinging from a $3.43 billion net profit for the second quarter.

"Not the cleanest set of results this morning given a number of one-offs impacting earnings, however from a CFFO [cash flow from operations] perspective, Shell reported strong results," RBC Capital Markets analyst Biraj Borkhataria said in a note.

Looking forward, Shell forecast capital expenditure to be around $20 billion for the whole of 2021.

In the fourth quarter, production from the integrated gas division is expected to average 940,000-980,000 oil-equivalent barrels a day, while LNG liquefaction volumes are projected at 8.0 million-8.6 million metric tons, benefiting from lower maintenance activities. Upstream production is seen at 2.10 million-2.35 million oil-equivalent barrels a day.

The oil products business is expected to deliver sales volumes of 4.20 million-5.20 million barrels a day, with refinery utilization of 68%-76%. As for the chemicals division, fourth quarter plant utilization is expected at 73%-81%, and sales volumes at 3.50 million-3.90 million tons.

Shell declared a quarterly dividend of $0.24 a share, unchanged from the second quarter.

Shares at 0739 GMT were down 1.8% at 1,733.8 pence.

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

(END) Dow Jones Newswires

October 28, 2021 03:55 ET (07:55 GMT)

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