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All You Need to Know About Shell's (SHEL) Q4 Earnings Update
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Shell plc (SHEL - Free Report) said its fourth-quarter profits would be impacted by some $2 billion due to the imposition of windfall taxes by the UK and European Union. To be reported as identified items, the taxation effect will not influence the period’s adjusted earnings. The London-based supermajor further revealed that its Chemicals and Products and Marketing division results would suffer this quarter but the Integrated Gas segment might benefit due to a boost from trading and optimization.
Now, let’s dig into some other segment-wise selected items from Friday’s release.
Upstream
According to the latest update, Shell’s upstream production fell 13.2% on a year-over-year basis in the fourth quarter of 2022 at the midpoint of the guidance. The supermajor is estimating its output in the range of 1,825-1,925 MBOE/d compared to 2,161 MBOE/d a year ago and 1,789 MBOE/d in the third quarter of 2022. Tax charges are expected to hurt earnings in the range of $3.1-3.9 billion.
Meanwhile, Shell sees the share of profit of joint ventures and associates to have an impact between a loss of $200 million and a gain of $400 million. The segment’s result is also likely to include well write-offs to the tune of $150-$550 million. Finally, operating expense for the segment is projected at around #3.1 billion.
Integrated Gas
Shell’s LNG liquefaction volumes are expected in the range of 6.6-7 million tons, translating into a deterioration of around 14% year over year and 6% sequentially. Shell’s integrated gas production is expected to decrease to the range of 900,000-940,000 barrels of oil equivalent per day (BOE/d) or 920,000 BOE/d at the midpoint. It was 927,000 BOE/d in the fourth quarter of 2021 and 924,000 BOE/d in the September quarter.
Per the company, fourth-quarter trading and optimization results in its integrated gas unit will be “significantly higher compared to the third quarter 2022.” Segment operating cost is expected between $1.2 billion and $1.4 billion.
Marketing
The midpoint of management’s marketing sales volume guidance equates to 2.55 million barrels per day, lower than the 2.581 achieved in the third quarter of 2022. Overall, segment profits are expected to be below the quarter-ago levels, while operating expenses would be between $2 and $2.3 billion.
Chemicals & Products
The company fears a considerable drop in its ‘Trading & Optimisation’ results from the third-quarter levels. However, as projected by Shell, the refining margin should strengthen in the fourth quarter, with the metric improving 27% sequentially. Meanwhile, despite chemical margins returning to positive territory, numbers are expected to be lower partly due to the Pennsylvania Chemicals project’s commencement of tax-related depreciation. Shell also forecast refinery utilization of 88-92%, operating expense of 2.8-3.2 billion and chemicals manufacturing plant utilization of 75-79%.
Renewables and Energy Solutions
The adjusted bottom line of this segment is expected to hover between a loss of $500 million and a profit of $100 million.
Q4 Estimates
This Zacks Rank #3 (Hold) company, which consolidated its dual headquarters in London over The Hague and became a single United Kingdom (“UK”) entity last year, is slated to release fourth-quarter 2022 results on Feb 2. The current Zacks Consensus Estimate for Shell’s to-be-reported quarter is a profit of $2.48 per share.
Key Energy Picks
Meanwhile, investors interested in the energy sector might look at operators like Murphy USA (MUSA - Free Report) , Helmerich & Payne (HP - Free Report) and ProPetro Holding (PUMP - Free Report) . Each of the companies has a Zacks Rank #1 (Strong Buy).
Murphy USA: Over the past 60 days, this El Dorado, AR-based Murphy USA has seen the Zacks Consensus Estimate for 2022 improve 4%. MUSA, which surpassed third-quarter bottom-line estimates by 18.7%, is valued at around $6.1 billion.
Murphy USA has a trailing four-quarter earnings surprise of roughly 51%, on average. MUSA has seen its shares gain 37.4% in a year.
Helmerich & Payne: Helmerich & Payne is valued at some $4.8 billion. The Zacks Consensus Estimate for HP’s fiscal 2023 earnings has been revised 19.9% upward over the past 60 days.
Helmerich & Payne, headquartered in Tulsa, OK, has a trailing four-quarter earnings surprise of roughly 51%, on average 124.2%. HP shares have surged 61.1% in a year.
ProPetro Holding: PUMP beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The 2022 Zacks Consensus Estimate for the company indicates 164.2% year-over-year earnings per share growth.
ProPetro Holding is valued at around $1.2 billion. PUMP has seen its shares gain 7.3% in a year.
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All You Need to Know About Shell's (SHEL) Q4 Earnings Update
Shell plc (SHEL - Free Report) said its fourth-quarter profits would be impacted by some $2 billion due to the imposition of windfall taxes by the UK and European Union. To be reported as identified items, the taxation effect will not influence the period’s adjusted earnings. The London-based supermajor further revealed that its Chemicals and Products and Marketing division results would suffer this quarter but the Integrated Gas segment might benefit due to a boost from trading and optimization.
Now, let’s dig into some other segment-wise selected items from Friday’s release.
Upstream
According to the latest update, Shell’s upstream production fell 13.2% on a year-over-year basis in the fourth quarter of 2022 at the midpoint of the guidance. The supermajor is estimating its output in the range of 1,825-1,925 MBOE/d compared to 2,161 MBOE/d a year ago and 1,789 MBOE/d in the third quarter of 2022. Tax charges are expected to hurt earnings in the range of $3.1-3.9 billion.
Meanwhile, Shell sees the share of profit of joint ventures and associates to have an impact between a loss of $200 million and a gain of $400 million. The segment’s result is also likely to include well write-offs to the tune of $150-$550 million. Finally, operating expense for the segment is projected at around #3.1 billion.
Integrated Gas
Shell’s LNG liquefaction volumes are expected in the range of 6.6-7 million tons, translating into a deterioration of around 14% year over year and 6% sequentially. Shell’s integrated gas production is expected to decrease to the range of 900,000-940,000 barrels of oil equivalent per day (BOE/d) or 920,000 BOE/d at the midpoint. It was 927,000 BOE/d in the fourth quarter of 2021 and 924,000 BOE/d in the September quarter.
Per the company, fourth-quarter trading and optimization results in its integrated gas unit will be “significantly higher compared to the third quarter 2022.” Segment operating cost is expected between $1.2 billion and $1.4 billion.
Marketing
The midpoint of management’s marketing sales volume guidance equates to 2.55 million barrels per day, lower than the 2.581 achieved in the third quarter of 2022. Overall, segment profits are expected to be below the quarter-ago levels, while operating expenses would be between $2 and $2.3 billion.
Chemicals & Products
The company fears a considerable drop in its ‘Trading & Optimisation’ results from the third-quarter levels. However, as projected by Shell, the refining margin should strengthen in the fourth quarter, with the metric improving 27% sequentially. Meanwhile, despite chemical margins returning to positive territory, numbers are expected to be lower partly due to the Pennsylvania Chemicals project’s commencement of tax-related depreciation. Shell also forecast refinery utilization of 88-92%, operating expense of 2.8-3.2 billion and chemicals manufacturing plant utilization of 75-79%.
Renewables and Energy Solutions
The adjusted bottom line of this segment is expected to hover between a loss of $500 million and a profit of $100 million.
Q4 Estimates
This Zacks Rank #3 (Hold) company, which consolidated its dual headquarters in London over The Hague and became a single United Kingdom (“UK”) entity last year, is slated to release fourth-quarter 2022 results on Feb 2. The current Zacks Consensus Estimate for Shell’s to-be-reported quarter is a profit of $2.48 per share.
Key Energy Picks
Meanwhile, investors interested in the energy sector might look at operators like Murphy USA (MUSA - Free Report) , Helmerich & Payne (HP - Free Report) and ProPetro Holding (PUMP - Free Report) . Each of the companies has a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA: Over the past 60 days, this El Dorado, AR-based Murphy USA has seen the Zacks Consensus Estimate for 2022 improve 4%. MUSA, which surpassed third-quarter bottom-line estimates by 18.7%, is valued at around $6.1 billion.
Murphy USA has a trailing four-quarter earnings surprise of roughly 51%, on average. MUSA has seen its shares gain 37.4% in a year.
Helmerich & Payne: Helmerich & Payne is valued at some $4.8 billion. The Zacks Consensus Estimate for HP’s fiscal 2023 earnings has been revised 19.9% upward over the past 60 days.
Helmerich & Payne, headquartered in Tulsa, OK, has a trailing four-quarter earnings surprise of roughly 51%, on average 124.2%. HP shares have surged 61.1% in a year.
ProPetro Holding: PUMP beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The 2022 Zacks Consensus Estimate for the company indicates 164.2% year-over-year earnings per share growth.
ProPetro Holding is valued at around $1.2 billion. PUMP has seen its shares gain 7.3% in a year.