Europe’s largest oil company Royal Dutch Shell plc reported second-quarter earnings per ADS (on a current cost of supplies basis, excluding items - the market’s preferred measure) of 16 cents. The Zacks Consensus Estimate was of a loss of 31 cents. The outperformance reflects strong trading gains.
However, the bottom line compared unfavorably with the year-ago profit of 84 cents. The underperformance mainly stemmed from the coronavirus-induced commodity price collapse.
The Hague-based Shell reported revenues of $32.5 billion, which were 64.6% below second-quarter 2019 sales of $91.8 billion.
Operational Performance
Upstream: The segment incurred a loss of $1.5 billion (excluding items) against profit of $1.3 billion (adjusted) in the year-ago period. This primarily reflects the impact of sharply lower oil and gas prices.
At $24.31 per barrel, the group’s worldwide realized liquids prices were 60% below the year-earlier levels while natural gas prices were down 24%.
Shell’s upstream volumes averaged 2,415 thousand oil-equivalent barrels per day (MBOE/d), down 7% from the year-ago period due to curtailments on account of the coronavirus and the OPEC+ production cut agreement, together with asset sales and lower joint venture production. Liquids production totaled 1,609 thousand barrels per day (down 2% year over year), while natural gas output came in at 4,673 million standard cubic feet per day (down 17%).
Oil Products: In this segment, the Anglo-Dutch super-major reported adjusted income of $2.4 billion, 89% more than the year-ago period. The favorable comparison was due to a particularly strong contribution from trading and lower operating expenses, partly offset by coronavirus-hit sales volumes (down 39% year over year) and lower refining margins. Meanwhile, refinery utilization came in at 70%, down 6% from the June quarter of 2019.
Integrated Gas: The unit reported adjusted income of $362 million, down 79% from the $1.7 billion in April-June quarter of 2019. Results were primarily impacted by lower commodity prices and charge associated with well write-offs, partly offset by increase in trading contributions and lower operating expenses. Meanwhile, the total Integrated Gas production fell 2% year over year to 904 MBOE/d. On a further bearish note, LNG liquefaction volumes were down 3% from the second quarter of 2019 to 8.36 million tons.
Chemicals: The segment recorded a profit of $206 million (excluding items) during the quarter, up 56% from the $132 million (adjusted) achieved in the year-ago period. The positive comparison was due to lower operating expenses.
Financial Performance
As of Jun 30, 2020, the Zacks Rank #2 (Buy) company, which trimmed its payout for the first time since World War II earlier this year, had $27.9 billion in cash and $105 billion in debt (including short-term debt). Net debt-to-capitalization ratio was approximately 32.7%, up from 27.6% a year ago.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
During the quarter under review, Shell generated cash flow from operations of $2.6 billion, returned $1.2 billion to shareholders through dividends and spent $3.6 billion cash on capital projects.
The company’s cash flow from operations slumped 77% from the year-earlier level. Meanwhile, the group raked in a meager $243 million in free cash flow during the second quarter, plunging from $6.9 billion a year ago.
Guidance
Shell expects third-quarter 2020 upstream volumes of 2,100-2,400 MBOE/d, while Integrated Gas production is expected between 820 MBOE/d and 880 MBOE/d.
Earnings Schedules of Other Oil Supermajors
Among the major integrated players, ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) are scheduled to release tomorrow, while continental rival BP plc (BP - Free Report) is set to report earnings on Tuesday.
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Zacks Names "Single Best Pick to Double"
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Europe’s largest oil company Royal Dutch Shell plc reported second-quarter earnings per ADS (on a current cost of supplies basis, excluding items - the market’s preferred measure) of 16 cents. The Zacks Consensus Estimate was of a loss of 31 cents. The outperformance reflects strong trading gains.
However, the bottom line compared unfavorably with the year-ago profit of 84 cents. The underperformance mainly stemmed from the coronavirus-induced commodity price collapse.
The Hague-based Shell reported revenues of $32.5 billion, which were 64.6% below second-quarter 2019 sales of $91.8 billion.
Operational Performance
Upstream: The segment incurred a loss of $1.5 billion (excluding items) against profit of $1.3 billion (adjusted) in the year-ago period. This primarily reflects the impact of sharply lower oil and gas prices.
At $24.31 per barrel, the group’s worldwide realized liquids prices were 60% below the year-earlier levels while natural gas prices were down 24%.
Shell’s upstream volumes averaged 2,415 thousand oil-equivalent barrels per day (MBOE/d), down 7% from the year-ago period due to curtailments on account of the coronavirus and the OPEC+ production cut agreement, together with asset sales and lower joint venture production. Liquids production totaled 1,609 thousand barrels per day (down 2% year over year), while natural gas output came in at 4,673 million standard cubic feet per day (down 17%).
Oil Products: In this segment, the Anglo-Dutch super-major reported adjusted income of $2.4 billion, 89% more than the year-ago period. The favorable comparison was due to a particularly strong contribution from trading and lower operating expenses, partly offset by coronavirus-hit sales volumes (down 39% year over year) and lower refining margins. Meanwhile, refinery utilization came in at 70%, down 6% from the June quarter of 2019.
Integrated Gas: The unit reported adjusted income of $362 million, down 79% from the $1.7 billion in April-June quarter of 2019. Results were primarily impacted by lower commodity prices and charge associated with well write-offs, partly offset by increase in trading contributions and lower operating expenses. Meanwhile, the total Integrated Gas production fell 2% year over year to 904 MBOE/d. On a further bearish note, LNG liquefaction volumes were down 3% from the second quarter of 2019 to 8.36 million tons.
Chemicals: The segment recorded a profit of $206 million (excluding items) during the quarter, up 56% from the $132 million (adjusted) achieved in the year-ago period. The positive comparison was due to lower operating expenses.
Financial Performance
As of Jun 30, 2020, the Zacks Rank #2 (Buy) company, which trimmed its payout for the first time since World War II earlier this year, had $27.9 billion in cash and $105 billion in debt (including short-term debt). Net debt-to-capitalization ratio was approximately 32.7%, up from 27.6% a year ago.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
During the quarter under review, Shell generated cash flow from operations of $2.6 billion, returned $1.2 billion to shareholders through dividends and spent $3.6 billion cash on capital projects.
The company’s cash flow from operations slumped 77% from the year-earlier level. Meanwhile, the group raked in a meager $243 million in free cash flow during the second quarter, plunging from $6.9 billion a year ago.
Guidance
Shell expects third-quarter 2020 upstream volumes of 2,100-2,400 MBOE/d, while Integrated Gas production is expected between 820 MBOE/d and 880 MBOE/d.
Earnings Schedules of Other Oil Supermajors
Among the major integrated players, ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) are scheduled to release tomorrow, while continental rival BP plc (BP - Free Report) is set to report earnings on Tuesday.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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