We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shell (SHEL) Misses on Q3 Earnings, Ups Shareholder Returns
Read MoreHide Full Article
Europe’s largest oil company Shell plc (SHEL - Free Report) reported third-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $2.58. The bottom line came in below the Zacks Consensus Estimate of $2.68. The underperformance reflects lower production and a pullback in refining margins from their second-quarter highs.
However, SHEL’s bottom line was well above the year-earlier quarter’s adjusted profit of $1.06 per ADS, backed by stronger commodity prices.
Shell’s revenues of $98.8 billion were up significantly from third-quarter 2021 sales of $61.6 billion.
Meanwhile, Shell repurchased $5 billion of shares in the third quarter. The energy group also announced that it completed the $6 billion buyback program scheduled for the third quarter of 2022. Moreover, SHEL expects another $4 billion of repurchases for the fourth quarter and promised to increase its dividend by 15%.
Shell PLC Unsponsored ADR Price, Consensus and EPS Surprise
Upstream: The segment recorded a profit of $5.9 billion (excluding items) during the quarter, skyrocketing from $1.7 billion (adjusted) in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.
At $93.02 per barrel, the group’s worldwide realized liquids prices were 38.6% above the year-earlier levels, while natural gas prices almost tripled.
Shell’s upstream volumes averaged 1,789 thousand oil-equivalent barrels per day (MBOE/d), down 11.9% from the year-ago period, mainly due to the loss of contribution from the company’s Salym petroleum development in Russia. Liquids production totaled 1,273 thousand barrels per day (down 14.8% year over year) and natural gas output came in at 2,995 million standard cubic feet per day (down 3.5%).
Chemicals and Products: In this segment, the London-based super-major reported an adjusted income of $772 million, 62.5% higher than the year-ago period. The highly favorable comparison was due to strong refining margins, robust trading contribution and lower depreciation charges, which offset lower chemicals profitability. Meanwhile, refinery utilization came in at 70%, down marginally from 71% during the September-end quarter of 2021.
Integrated Gas: The unit reported an adjusted income of $2.3 billion, up from $1.8 billion in the July-September quarter of 2021. Results were primarily impacted by higher LNG sales volumes, which increased 3.2% from the third quarter of 2021 to 15.66 million tons. However, total Integrated Gas production fell 6.6% year over year to 924 MBOE/d.
Marketing: The segment recorded an income of $820 million (excluding items) during the quarter compared to the year-ago earnings of $1.1 billion due to a dip in lubricants margins.
Renewables and Energy Solutions: The segment logged an adjusted income of $383 million, turning around from the year-ago loss of $171 million. The performance boost reflects higher trading and optimisation margins for gas and power. Moreover, external power sales were up 4.7% year over year to 67 terawatt hours, though piped gas sales fell 18.2% to 157 terawatt hours.
Financial Performance
As of Sep 30, 2022, the Zacks Rank #2 (Buy) company had $36 billion in cash and $82 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 20.3%, down from 25.6% a year ago.
During the quarter under review, Shell generated cash flow from operations of $12.5 billion, returned $1.8 billion to its shareholders through dividends and spent $5.3 billion on capital projects.
The company’s cash flow from operations decreased 21.8% from the year-earlier level. Meanwhile, the group raked in $7.5 billion in free cash flow during the third quarter compared to $12.2 billion a year ago.
Guidance
Shell expects fourth-quarter 2022 upstream volumes of 1,750-1,950 MBOE/d, while Integrated Gas production is expected between 910 MBOE/d and 960 MBOE/d. The company also foresees marketing sales volumes of 2,250-2,750 thousand barrels per day, Chemicals sales volumes of 2,700-3,200 thousand tons and refinery utilization in the range of 88-96% were also guided.
Important Energy Releases So Far
Let’s take a look at some key energy releases so far.
Schlumberger (SLB - Free Report) , the largest oilfield contractor, announced third-quarter earnings of 63 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 55 cents. SLB recorded total revenues of $7.5 billion, outpacing the Zacks Consensus Estimate by 4.7%.
Schlumberger’s strong quarterly earnings resulted from strong activities in land and offshore resources in North America and Latin America. In more good news for investors, SLB generated a free cash flow of $1.1 billion during the period. The Zacks Rank #2 (Buy) company’s capital expenditure came in at $382 million. As of Sep 30, 2022, SLB had approximately $3.6 billion in cash and short-term investments. It had long-term debt of $12.5 billion at the end of the third quarter.
Smaller rival Halliburton (HAL - Free Report) reported third-quarter adjusted net income per share of 60 cents, surpassing the Zacks Consensus Estimate of 56 cents and well above the year-ago quarter profit of 28 cents. HAL’s outperformance reflects stronger-than-expected profit from both its divisions and came in spite of the company’s exit from Russia.
Meanwhile, revenues of $5.4 billion were 38.8% higher than the corresponding period of 2021 and above the Zacks Consensus Estimate of $5.3 billion. North American revenues rose 63.2% year over year to $2.6 billion, while revenues from Halliburton’s international operations were up 21.2% from the year-ago period to $2.7 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
On the other hand, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported third-quarter 2022 adjusted earnings per share of 25 cents, missing the Zacks Consensus Estimate of 29 cents per share. The disappointing bottom line numbers could be blamed on lower pipeline volumes of gasoline and diesel fuel, partially offset by higher contributions from KMI’s natural gas pipelines and CO2 segments.
As of Sep 30, 2022, Kinder Morgan reported $483 million in cash and cash equivalents. The company’s long-term debt amounted to $29 billion, resulting in a debt to capitalization of 49.6%. For 2022, KMI expects a dividend of $1.11 per share, suggesting an increase of 3% from the prior-year reported figure.
Image: Bigstock
Shell (SHEL) Misses on Q3 Earnings, Ups Shareholder Returns
Europe’s largest oil company Shell plc (SHEL - Free Report) reported third-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $2.58. The bottom line came in below the Zacks Consensus Estimate of $2.68. The underperformance reflects lower production and a pullback in refining margins from their second-quarter highs.
However, SHEL’s bottom line was well above the year-earlier quarter’s adjusted profit of $1.06 per ADS, backed by stronger commodity prices.
Shell’s revenues of $98.8 billion were up significantly from third-quarter 2021 sales of $61.6 billion.
Meanwhile, Shell repurchased $5 billion of shares in the third quarter. The energy group also announced that it completed the $6 billion buyback program scheduled for the third quarter of 2022. Moreover, SHEL expects another $4 billion of repurchases for the fourth quarter and promised to increase its dividend by 15%.
Shell PLC Unsponsored ADR Price, Consensus and EPS Surprise
Shell PLC Unsponsored ADR price-consensus-eps-surprise-chart | Shell PLC Unsponsored ADR Quote
Inside Shell’s Segments
Upstream: The segment recorded a profit of $5.9 billion (excluding items) during the quarter, skyrocketing from $1.7 billion (adjusted) in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.
At $93.02 per barrel, the group’s worldwide realized liquids prices were 38.6% above the year-earlier levels, while natural gas prices almost tripled.
Shell’s upstream volumes averaged 1,789 thousand oil-equivalent barrels per day (MBOE/d), down 11.9% from the year-ago period, mainly due to the loss of contribution from the company’s Salym petroleum development in Russia. Liquids production totaled 1,273 thousand barrels per day (down 14.8% year over year) and natural gas output came in at 2,995 million standard cubic feet per day (down 3.5%).
Chemicals and Products: In this segment, the London-based super-major reported an adjusted income of $772 million, 62.5% higher than the year-ago period. The highly favorable comparison was due to strong refining margins, robust trading contribution and lower depreciation charges, which offset lower chemicals profitability. Meanwhile, refinery utilization came in at 70%, down marginally from 71% during the September-end quarter of 2021.
Integrated Gas: The unit reported an adjusted income of $2.3 billion, up from $1.8 billion in the July-September quarter of 2021. Results were primarily impacted by higher LNG sales volumes, which increased 3.2% from the third quarter of 2021 to 15.66 million tons. However, total Integrated Gas production fell 6.6% year over year to 924 MBOE/d.
Marketing: The segment recorded an income of $820 million (excluding items) during the quarter compared to the year-ago earnings of $1.1 billion due to a dip in lubricants margins.
Renewables and Energy Solutions: The segment logged an adjusted income of $383 million, turning around from the year-ago loss of $171 million. The performance boost reflects higher trading and optimisation margins for gas and power. Moreover, external power sales were up 4.7% year over year to 67 terawatt hours, though piped gas sales fell 18.2% to 157 terawatt hours.
Financial Performance
As of Sep 30, 2022, the Zacks Rank #2 (Buy) company had $36 billion in cash and $82 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 20.3%, down from 25.6% a year ago.
You can see the complete list of today’s Zacks #1 Rank stocks here.
During the quarter under review, Shell generated cash flow from operations of $12.5 billion, returned $1.8 billion to its shareholders through dividends and spent $5.3 billion on capital projects.
The company’s cash flow from operations decreased 21.8% from the year-earlier level. Meanwhile, the group raked in $7.5 billion in free cash flow during the third quarter compared to $12.2 billion a year ago.
Guidance
Shell expects fourth-quarter 2022 upstream volumes of 1,750-1,950 MBOE/d, while Integrated Gas production is expected between 910 MBOE/d and 960 MBOE/d. The company also foresees marketing sales volumes of 2,250-2,750 thousand barrels per day, Chemicals sales volumes of 2,700-3,200 thousand tons and refinery utilization in the range of 88-96% were also guided.
Important Energy Releases So Far
Let’s take a look at some key energy releases so far.
Schlumberger (SLB - Free Report) , the largest oilfield contractor, announced third-quarter earnings of 63 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 55 cents. SLB recorded total revenues of $7.5 billion, outpacing the Zacks Consensus Estimate by 4.7%.
Schlumberger’s strong quarterly earnings resulted from strong activities in land and offshore resources in North America and Latin America. In more good news for investors, SLB generated a free cash flow of $1.1 billion during the period. The Zacks Rank #2 (Buy) company’s capital expenditure came in at $382 million. As of Sep 30, 2022, SLB had approximately $3.6 billion in cash and short-term investments. It had long-term debt of $12.5 billion at the end of the third quarter.
Smaller rival Halliburton (HAL - Free Report) reported third-quarter adjusted net income per share of 60 cents, surpassing the Zacks Consensus Estimate of 56 cents and well above the year-ago quarter profit of 28 cents. HAL’s outperformance reflects stronger-than-expected profit from both its divisions and came in spite of the company’s exit from Russia.
Meanwhile, revenues of $5.4 billion were 38.8% higher than the corresponding period of 2021 and above the Zacks Consensus Estimate of $5.3 billion. North American revenues rose 63.2% year over year to $2.6 billion, while revenues from Halliburton’s international operations were up 21.2% from the year-ago period to $2.7 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
On the other hand, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported third-quarter 2022 adjusted earnings per share of 25 cents, missing the Zacks Consensus Estimate of 29 cents per share. The disappointing bottom line numbers could be blamed on lower pipeline volumes of gasoline and diesel fuel, partially offset by higher contributions from KMI’s natural gas pipelines and CO2 segments.
As of Sep 30, 2022, Kinder Morgan reported $483 million in cash and cash equivalents. The company’s long-term debt amounted to $29 billion, resulting in a debt to capitalization of 49.6%. For 2022, KMI expects a dividend of $1.11 per share, suggesting an increase of 3% from the prior-year reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.