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Shell Q3 Earnings Beat as High LNG Sales Offset Refining Woes
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Europe’s largest oil company, Shell plc (SHEL - Free Report) , reported third-quarter 2024 earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $1.92. The bottom line came in well above the Zacks Consensus Estimate of $1.72 and improved from the year-earlier quarter’s earnings of $1.86 per American Depositary Share (ADS), backed by strong production and higher LNG sales.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
However, Shell’s revenues of $72.5 billion were down from $78 billion in third-quarter 2023 and missed the consensus mark of $84.6 billion. This was primarily due to weaker commodity prices and a significant drop in the Chemicals and Products’ performance.
Meanwhile, Shell repurchased $3.5 billion of shares in the third quarter. The London-based company expects another $3.5 billion worth of repurchases for the fourth quarter.
Upstream: The segment recorded a profit of $2.4 billion (excluding items) during the quarter, up from $2.2 billion (adjusted) in the year-ago period and ahead of the Zacks Consensus Estimate of $2 billion. This primarily reflects the impact of higher volumes, partly offset by lower oil and gas prices.
At $75.07 per barrel, the group’s worldwide realized liquids prices were 5% below the year-earlier levels, while natural gas prices fell 2.1%.
Shell’s upstream volumes averaged 1,811 thousand oil-equivalent barrels per day (MBOE/d), up 3.3% from the year-ago period and ahead of the Zacks Consensus Estimate of 1,790 MBOE/d, mainly due to new crude production. Liquids production totaled 1,321 thousand barrels per day (a marginal increase of 0.7% year over year) and natural gas output came in at 2,844 million standard cubic feet per day (up 10.9%).
Chemicals and Products: In this segment, the London-based supermajor reported an adjusted income of $463 million, plunging from $1.5 billion in the year-ago period. The highly unfavorable comparison was due to a drop in refining margins and weakness in trading and optimisation to go with lower Chemicals margins and higher operating expenses. Meanwhile, refinery utilization came in at 81% compared with 92% during the September-end quarter of 2023. The figure was also lower than the consensus mark of 83%.
Integrated Gas: The unit reported an adjusted income of $2.9 billion, improving from $2.5 billion in the July-September quarter of 2023 and going past the Zacks Consensus Estimate by more than 11%. Results were primarily impacted by higher LNG sales volumes, which climbed 6.4% from the third quarter of 2023 to 17.04 million tons (consensus called for 16.62 million tons). Moreover, total Integrated Gas production rose 4.6% year over year to 941 MBOE/d.
Marketing: The segment recorded an income of $1.2 billion (excluding items) during the quarter compared to the year-ago earnings of $641 million due to higher Mobility business margins. The Zacks Consensus Estimate pegged the Marketing unit income at $1.1 billion.
Renewables and Energy Solutions: The segment logged an adjusted loss of $162 million, deteriorating from the year-ago loss of $51 million and underperforming the consensus mark by $93 million. The performance blip reflects lower trading and optimization results in the Americas. External power sales were up 3.9% year over year to 79 terawatt hours, though piped gas sales fell 12.9% to 148 terawatt hours.
Financial Performance
As of Sept. 30, 2024, the Zacks Rank #3 (Hold) company had $42.3 billion in cash and $76.6 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 15.7%, down from 17.3% a year ago.
During the quarter under review, Shell generated cash flow from operations of $14.7 billion, returned $2.2 billion to its shareholders through dividends and spent $4.7 billion on capital projects.
The company’s cash flow from operations increased 19% from the year-earlier level. Meanwhile, the group raked in $10.8 billion in free cash flow during the third quarter compared to $7.5 billion a year ago.
Guidance
Shell expects fourth-quarter 2024 upstream volumes of 1,750-1,950 MBOE/d, while Integrated Gas production is expected between 900 MBOE/d and 960 MBOE/d. The company also foresees marketing sales volumes of 2,550-3,050 thousand barrels per day and refinery utilization in the range of 75-83%.
Important Energy Earnings So Far
While we have discussed Shell’s third-quarter results in detail, let’s take a look at some other key integrated energy reports of this season.
One of the largest energy companies in the world, ExxonMobil (XOM - Free Report) , reported third-quarter 2024 earnings per share of $1.92 (excluding identified items), which beat the Zacks Consensus Estimate of $1.91. The bottom line, however, declined from the year-ago level of $2.27. Better-than-expected quarterly earnings were primarily driven by record-high liquids production volumes in the upstream segment and increased contributions from the Chemical Products segment, partially offset by lower commodity price realizations and weaker refining margins.
ExxonMobil reported a cash flow of $17.7 billion from operations and asset divestments. The company’s capital and exploration spending amounted to $7.16 billion. Total cash and cash equivalents were $26.9 billion, and long-term debt totaled $36.9 billion.
Smaller rival Chevron (CVX - Free Report) reported adjusted third-quarter earnings per share of $2.51, beating the Zacks Consensus Estimate of $2.47. The outperformance stemmed from higher-than-expected U.S. production in the company’s key upstream segment, as volume from the Permian Basin reached an all-time high. The unit’s domestic output of 1,605 thousand oil-equivalent barrels per day (MBOE/d) came in slightly above the consensus mark of 1,602 MBOE/d.
CVX recorded $9.7 billion in cash flow from operations, the same as the year-ago period, as a drop in earnings and a one-time outgo was somewhat offset by higher dividends from equity affiliates and lower working capital. Chevron’s free cash flow for the quarter was $5.6 billion.
European biggie BP plc (BP - Free Report) reported third-quarter 2024 adjusted earnings of 83 cents per ADS on a replacement-cost basis, excluding non-operating items. The figure beat the Zacks Consensus Estimate of 78 cents. The outperformance can be primarily attributed to higher liquids production and stronger retail fuel margins.
BP’s organic capital expenditure in the reported quarter totaled $4.3 billion. The company registered a total capital spending of $4.5 billion for the quarter. Its net debt was $24.3 billion at the end of the third quarter. Also, the firm announced a gearing of 23.3% in the third quarter.
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Shell Q3 Earnings Beat as High LNG Sales Offset Refining Woes
Europe’s largest oil company, Shell plc (SHEL - Free Report) , reported third-quarter 2024 earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $1.92. The bottom line came in well above the Zacks Consensus Estimate of $1.72 and improved from the year-earlier quarter’s earnings of $1.86 per American Depositary Share (ADS), backed by strong production and higher LNG sales.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
However, Shell’s revenues of $72.5 billion were down from $78 billion in third-quarter 2023 and missed the consensus mark of $84.6 billion. This was primarily due to weaker commodity prices and a significant drop in the Chemicals and Products’ performance.
Meanwhile, Shell repurchased $3.5 billion of shares in the third quarter. The London-based company expects another $3.5 billion worth of repurchases for the fourth quarter.
Shell PLC Unsponsored ADR Price and EPS Surprise
Shell PLC Unsponsored ADR price-eps-surprise | Shell PLC Unsponsored ADR Quote
Inside Shell’s Segments
Upstream: The segment recorded a profit of $2.4 billion (excluding items) during the quarter, up from $2.2 billion (adjusted) in the year-ago period and ahead of the Zacks Consensus Estimate of $2 billion. This primarily reflects the impact of higher volumes, partly offset by lower oil and gas prices.
At $75.07 per barrel, the group’s worldwide realized liquids prices were 5% below the year-earlier levels, while natural gas prices fell 2.1%.
Shell’s upstream volumes averaged 1,811 thousand oil-equivalent barrels per day (MBOE/d), up 3.3% from the year-ago period and ahead of the Zacks Consensus Estimate of 1,790 MBOE/d, mainly due to new crude production. Liquids production totaled 1,321 thousand barrels per day (a marginal increase of 0.7% year over year) and natural gas output came in at 2,844 million standard cubic feet per day (up 10.9%).
Chemicals and Products: In this segment, the London-based supermajor reported an adjusted income of $463 million, plunging from $1.5 billion in the year-ago period. The highly unfavorable comparison was due to a drop in refining margins and weakness in trading and optimisation to go with lower Chemicals margins and higher operating expenses. Meanwhile, refinery utilization came in at 81% compared with 92% during the September-end quarter of 2023. The figure was also lower than the consensus mark of 83%.
Integrated Gas: The unit reported an adjusted income of $2.9 billion, improving from $2.5 billion in the July-September quarter of 2023 and going past the Zacks Consensus Estimate by more than 11%. Results were primarily impacted by higher LNG sales volumes, which climbed 6.4% from the third quarter of 2023 to 17.04 million tons (consensus called for 16.62 million tons). Moreover, total Integrated Gas production rose 4.6% year over year to 941 MBOE/d.
Marketing: The segment recorded an income of $1.2 billion (excluding items) during the quarter compared to the year-ago earnings of $641 million due to higher Mobility business margins. The Zacks Consensus Estimate pegged the Marketing unit income at $1.1 billion.
Renewables and Energy Solutions: The segment logged an adjusted loss of $162 million, deteriorating from the year-ago loss of $51 million and underperforming the consensus mark by $93 million. The performance blip reflects lower trading and optimization results in the Americas. External power sales were up 3.9% year over year to 79 terawatt hours, though piped gas sales fell 12.9% to 148 terawatt hours.
Financial Performance
As of Sept. 30, 2024, the Zacks Rank #3 (Hold) company had $42.3 billion in cash and $76.6 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 15.7%, down from 17.3% 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 $14.7 billion, returned $2.2 billion to its shareholders through dividends and spent $4.7 billion on capital projects.
The company’s cash flow from operations increased 19% from the year-earlier level. Meanwhile, the group raked in $10.8 billion in free cash flow during the third quarter compared to $7.5 billion a year ago.
Guidance
Shell expects fourth-quarter 2024 upstream volumes of 1,750-1,950 MBOE/d, while Integrated Gas production is expected between 900 MBOE/d and 960 MBOE/d. The company also foresees marketing sales volumes of 2,550-3,050 thousand barrels per day and refinery utilization in the range of 75-83%.
Important Energy Earnings So Far
While we have discussed Shell’s third-quarter results in detail, let’s take a look at some other key integrated energy reports of this season.
One of the largest energy companies in the world, ExxonMobil (XOM - Free Report) , reported third-quarter 2024 earnings per share of $1.92 (excluding identified items), which beat the Zacks Consensus Estimate of $1.91. The bottom line, however, declined from the year-ago level of $2.27. Better-than-expected quarterly earnings were primarily driven by record-high liquids production volumes in the upstream segment and increased contributions from the Chemical Products segment, partially offset by lower commodity price realizations and weaker refining margins.
ExxonMobil reported a cash flow of $17.7 billion from operations and asset divestments. The company’s capital and exploration spending amounted to $7.16 billion. Total cash and cash equivalents were $26.9 billion, and long-term debt totaled $36.9 billion.
Smaller rival Chevron (CVX - Free Report) reported adjusted third-quarter earnings per share of $2.51, beating the Zacks Consensus Estimate of $2.47. The outperformance stemmed from higher-than-expected U.S. production in the company’s key upstream segment, as volume from the Permian Basin reached an all-time high. The unit’s domestic output of 1,605 thousand oil-equivalent barrels per day (MBOE/d) came in slightly above the consensus mark of 1,602 MBOE/d.
CVX recorded $9.7 billion in cash flow from operations, the same as the year-ago period, as a drop in earnings and a one-time outgo was somewhat offset by higher dividends from equity affiliates and lower working capital. Chevron’s free cash flow for the quarter was $5.6 billion.
European biggie BP plc (BP - Free Report) reported third-quarter 2024 adjusted earnings of 83 cents per ADS on a replacement-cost basis, excluding non-operating items. The figure beat the Zacks Consensus Estimate of 78 cents. The outperformance can be primarily attributed to higher liquids production and stronger retail fuel margins.
BP’s organic capital expenditure in the reported quarter totaled $4.3 billion. The company registered a total capital spending of $4.5 billion for the quarter. Its net debt was $24.3 billion at the end of the third quarter. Also, the firm announced a gearing of 23.3% in the third quarter.