Europe’s largest oil company Royal Dutch Shell plc reported first-quarter earnings per ADS (on a current cost of supplies basis, excluding items - the market’s preferred measure) of 74 cents, above the Zacks Consensus Estimate of 51 cents on higher LNG sales volumes.
However, the bottom line compared unfavorably with the year-ago profit of $1.30. The underperformance mainly stemmed from lower oil and gas prices.
The Hague-based Shell reported revenues of $61 billion, which were 29% below the first-quarter 2019 sales of $85.7 billion.
Meanwhile, the company cut its dividend by 66%, and said it would suspend the next installment of its stock repurchase program. Forced by the historic oil market crash and the coronavirus-induced demand destruction for the fuel, Shell trimmed its payout for the first time since World War II, in the process becoming the second oil major after Equinor (EQNR - Free Report) to do so. While another European peer BP plc stuck to its dividend for now, there is a lot of speculation as to what is to come from the likes of U.S. biggies ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) .
Operational Performance
Upstream: Upstream segment recorded a profit of $291 million (excluding items) during the quarter, down 82% from the $1.6 billion (adjusted) achieved in the year-ago period. This primarily reflects the impact of drop in production, plus lower oil and gas prices.
Shell’s upstream volumes averaged 2,710 thousand oil-equivalent barrels per day/MBOE/d (64% liquids), down 5% from the year-ago period due to asset sales, normal field declines and lower joint venture production. Liquids production totaled 1,730 thousand barrels per day (up 4% year over year), while natural gas output came in at 5,680 million standard cubic feet per day (down 17%).
At $46.53 per barrel, the group’s worldwide realized liquids prices were 19% below the year-earlier levels while natural gas prices were down 20%.
Oil Products: In the Oil Products segment, the Anglo-Dutch super-major reported adjusted income of $1.4 billion, 6% less than the year-ago period. The negative comparison was due to decline in sales volumes (down 18% year over year) and lower refining margins. Meanwhile, refinery utilization came in at 81%, up 2% from the March quarter of 2019.
Integrated Gas: The Integrated Gas unit reported adjusted income of $2.1 billion, down 17% from the $2.6 billion in January-March quarter of 2019. Results were primarily impacted by lower commodity prices and decline in trading contribution. Meanwhile, the total Integrated Gas production increased by 12% year over year to 955 MBOE/d. On a further positive note, LNG liquefaction volumes were up 2% from the first quarter of 2019 to 8.88 million tons.
Chemicals: In the Chemicals segment, the company recorded a profit of $148 million (excluding items) during the quarter, down 67% from the $451 million (adjusted) achieved in the year-ago period. The negative comparison was due to decreasing volumes, lower margins and higher operating expenses.
Financial Performance
As of Mar 31, 2020, the Zacks Rank #3 (Hold) company had $21.8 billion in cash and $95.1 billion in debt (including short-term debt). Net debt-to-capitalization ratio was approximately 28.9%, up from 26.5% 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 $14.9 billion, returned $3.5 billion to shareholders through dividends and spent $5 billion cash on capital projects.
The company’s cash flow from operations surged 72% from the year-earlier level. Meanwhile, the group raked in $12.1 billion in free cash flow during the first quarter, jumping from $4 billion a year ago. Moreover, it was more than enough to take care of its $1 billion in share buybacks and its $3.5 billion dividend.
Guidance
Shell expects second quarter 2020 upstream volumes to be 1,750 - 2,250 MBOE/d, while Integrated Gas production is expected to be between 840 MBOE/d and 890 MBOE/d.
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Europe’s largest oil company Royal Dutch Shell plc reported first-quarter earnings per ADS (on a current cost of supplies basis, excluding items - the market’s preferred measure) of 74 cents, above the Zacks Consensus Estimate of 51 cents on higher LNG sales volumes.
However, the bottom line compared unfavorably with the year-ago profit of $1.30. The underperformance mainly stemmed from lower oil and gas prices.
The Hague-based Shell reported revenues of $61 billion, which were 29% below the first-quarter 2019 sales of $85.7 billion.
Meanwhile, the company cut its dividend by 66%, and said it would suspend the next installment of its stock repurchase program. Forced by the historic oil market crash and the coronavirus-induced demand destruction for the fuel, Shell trimmed its payout for the first time since World War II, in the process becoming the second oil major after Equinor (EQNR - Free Report) to do so. While another European peer BP plc stuck to its dividend for now, there is a lot of speculation as to what is to come from the likes of U.S. biggies ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) .
Operational Performance
Upstream: Upstream segment recorded a profit of $291 million (excluding items) during the quarter, down 82% from the $1.6 billion (adjusted) achieved in the year-ago period. This primarily reflects the impact of drop in production, plus lower oil and gas prices.
Shell’s upstream volumes averaged 2,710 thousand oil-equivalent barrels per day/MBOE/d (64% liquids), down 5% from the year-ago period due to asset sales, normal field declines and lower joint venture production. Liquids production totaled 1,730 thousand barrels per day (up 4% year over year), while natural gas output came in at 5,680 million standard cubic feet per day (down 17%).
At $46.53 per barrel, the group’s worldwide realized liquids prices were 19% below the year-earlier levels while natural gas prices were down 20%.
Oil Products: In the Oil Products segment, the Anglo-Dutch super-major reported adjusted income of $1.4 billion, 6% less than the year-ago period. The negative comparison was due to decline in sales volumes (down 18% year over year) and lower refining margins. Meanwhile, refinery utilization came in at 81%, up 2% from the March quarter of 2019.
Integrated Gas: The Integrated Gas unit reported adjusted income of $2.1 billion, down 17% from the $2.6 billion in January-March quarter of 2019. Results were primarily impacted by lower commodity prices and decline in trading contribution. Meanwhile, the total Integrated Gas production increased by 12% year over year to 955 MBOE/d. On a further positive note, LNG liquefaction volumes were up 2% from the first quarter of 2019 to 8.88 million tons.
Chemicals: In the Chemicals segment, the company recorded a profit of $148 million (excluding items) during the quarter, down 67% from the $451 million (adjusted) achieved in the year-ago period. The negative comparison was due to decreasing volumes, lower margins and higher operating expenses.
Financial Performance
As of Mar 31, 2020, the Zacks Rank #3 (Hold) company had $21.8 billion in cash and $95.1 billion in debt (including short-term debt). Net debt-to-capitalization ratio was approximately 28.9%, up from 26.5% 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 $14.9 billion, returned $3.5 billion to shareholders through dividends and spent $5 billion cash on capital projects.
The company’s cash flow from operations surged 72% from the year-earlier level. Meanwhile, the group raked in $12.1 billion in free cash flow during the first quarter, jumping from $4 billion a year ago. Moreover, it was more than enough to take care of its $1 billion in share buybacks and its $3.5 billion dividend.
Guidance
Shell expects second quarter 2020 upstream volumes to be 1,750 - 2,250 MBOE/d, while Integrated Gas production is expected to be between 840 MBOE/d and 890 MBOE/d.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
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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