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Shell Renews Q3 Outlook, Plans to Cut 10% Workforce by 2022
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Royal Dutch Shell recently provided an update on third-quarter 2020 guidance.
Let’s delve deep into some key segmental estimate revisions for the September quarter.
Upstream
The upstream production is projected between 2,150 and 2,250 thousand barrels of oil equivalent per day (boe/d) after adjusting the impact of hurricanes in the Gulf of Mexico. The year-ago production was 2,606 thousand boe/d. However, Shell had earlier predicted its third-quarter 2020 upstream volumes to be 2,100-2,400 thousand boe/d. Taking into account the lower realized liquid prices, Shell expects to incur adjusted loss in this segment.
Oil Products
Shell estimates third-quarter oil product sales in the band of 4,000-5,000 thousand barrels per day. This indicates a 25.7% decrease from the year-earlier reported number due to a dramatic drop in demand stemming from the adverse COVID-19 impact, assuming that the upper end of the estimate will be met. This Netherlands-based company anticipates its refinery availability between 64% and 68%.
Chemicals
The company’s chemical sales volumes are predicted between 3,700 and 4,000 thousand tons with plant utilization of 79-83%. Further, Shell expects adjusted earnings to be affected to the tune of $100 million due to provisions and maintenance activities.
Integrated Gas
The company expects third-quarter LNG liquefaction volumes to contract to 7.9-8.3 million tonnes from its previous year’s quarterly output of 8.95 million tonnes. Moreover, its segmental production is forecast in the 820-860 thousand boe/d band. In the year-earlier period, Shell produced 957 thousand boe/d.
Measures by Shell to Survive Weak Energy Market
By now, we all know about the weakness in oil price following the plaguing pandemic’s adverse impact on global energy demand. As a result, the outlook for all industries in the energy sector business seems lackluster. Such a bleak scenario even induced some of Europe's biggest energy companies to shift to cleaner fuels and low-carbon energy. Thus, energy players are limiting their capital budgets by cutting costs and simplifying the corporate structure as it moves away from fossil fuels.
As part of a major overhaul to shift its focus to low-carbon energy, Shell plans to make 7,000-9,000 staff redundant by the end of 2022, thereby affecting 10% of its total workforce including 1,500 people who voluntarily agreed to exit the company this year. Shell expects the overhaul to deliver annual cost savings of up to $2.5 billion by 2022. The company also envisioned third-quarter post-tax impairment charges between $1 billion and $1.5 billion.
Earlier this year, oil supermajor and Shell’s continental rival BP plc. (BP - Free Report) announced plans to trim nearly 10,000 positions as it plans to lower its oil and gas production volumes and focus more on expanding its renewables business.
Another supermajor Chevron Corporation (CVX - Free Report) is slashing headcount by nearly 10-15%, indicating an approximatelayoff of 6,000 of its 45,000 non-gas station staff. This move is in line with the company’s continued portfolio rationalization to reflect its operational efficiencies and match the projected activity levels.
Oil biggie Exxon Mobil Corporation (XOM - Free Report) is considering reducing personnel across its worldwide operations, per Reuters. The report also confirms the integrated energy major’s voluntary redundancy program in Australia.
Although the company hasn’t announced the percentage of workforce it is going to lay off, the energy major will continue with its lay-off program worldwide into 2021 as well, the report added. Notably, outside the United States, Australia is the first country where ExxonMobil reviewed its business.
About Shell
This energy player belongs to a global group of energy and petrochemical companies. It is involved in all phases of the petroleum industry from exploration to final processing and delivery. The company is scheduled to release third-quarter earnings results on Oct 29, 2020.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Shell Renews Q3 Outlook, Plans to Cut 10% Workforce by 2022
Royal Dutch Shell recently provided an update on third-quarter 2020 guidance.
Let’s delve deep into some key segmental estimate revisions for the September quarter.
Upstream
The upstream production is projected between 2,150 and 2,250 thousand barrels of oil equivalent per day (boe/d) after adjusting the impact of hurricanes in the Gulf of Mexico. The year-ago production was 2,606 thousand boe/d. However, Shell had earlier predicted its third-quarter 2020 upstream volumes to be 2,100-2,400 thousand boe/d. Taking into account the lower realized liquid prices, Shell expects to incur adjusted loss in this segment.
Oil Products
Shell estimates third-quarter oil product sales in the band of 4,000-5,000 thousand barrels per day. This indicates a 25.7% decrease from the year-earlier reported number due to a dramatic drop in demand stemming from the adverse COVID-19 impact, assuming that the upper end of the estimate will be met. This Netherlands-based company anticipates its refinery availability between 64% and 68%.
Chemicals
The company’s chemical sales volumes are predicted between 3,700 and 4,000 thousand tons with plant utilization of 79-83%. Further, Shell expects adjusted earnings to be affected to the tune of $100 million due to provisions and maintenance activities.
Integrated Gas
The company expects third-quarter LNG liquefaction volumes to contract to 7.9-8.3 million tonnes from its previous year’s quarterly output of 8.95 million tonnes. Moreover, its segmental production is forecast in the 820-860 thousand boe/d band. In the year-earlier period, Shell produced 957 thousand boe/d.
Measures by Shell to Survive Weak Energy Market
By now, we all know about the weakness in oil price following the plaguing pandemic’s adverse impact on global energy demand. As a result, the outlook for all industries in the energy sector business seems lackluster. Such a bleak scenario even induced some of Europe's biggest energy companies to shift to cleaner fuels and low-carbon energy. Thus, energy players are limiting their capital budgets by cutting costs and simplifying the corporate structure as it moves away from fossil fuels.
As part of a major overhaul to shift its focus to low-carbon energy, Shell plans to make 7,000-9,000 staff redundant by the end of 2022, thereby affecting 10% of its total workforce including 1,500 people who voluntarily agreed to exit the company this year. Shell expects the overhaul to deliver annual cost savings of up to $2.5 billion by 2022. The company also envisioned third-quarter post-tax impairment charges between $1 billion and $1.5 billion.
Earlier this year, oil supermajor and Shell’s continental rival BP plc. (BP - Free Report) announced plans to trim nearly 10,000 positions as it plans to lower its oil and gas production volumes and focus more on expanding its renewables business.
Another supermajor Chevron Corporation (CVX - Free Report) is slashing headcount by nearly 10-15%, indicating an approximatelayoff of 6,000 of its 45,000 non-gas station staff. This move is in line with the company’s continued portfolio rationalization to reflect its operational efficiencies and match the projected activity levels.
Oil biggie Exxon Mobil Corporation (XOM - Free Report) is considering reducing personnel across its worldwide operations, per Reuters. The report also confirms the integrated energy major’s voluntary redundancy program in Australia.
Although the company hasn’t announced the percentage of workforce it is going to lay off, the energy major will continue with its lay-off program worldwide into 2021 as well, the report added. Notably, outside the United States, Australia is the first country where ExxonMobil reviewed its business.
About Shell
This energy player belongs to a global group of energy and petrochemical companies. It is involved in all phases of the petroleum industry from exploration to final processing and delivery. The company is scheduled to release third-quarter earnings results on Oct 29, 2020.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>