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Shell (RDS.A) Renews Q3 Outlook, Rides on High LNG Volumes

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Royal Dutch Shell (RDS.A - Free Report) recently announced the updated version of its third-quarter guidance. Let’s delve into some key segmental revisions.

Upstream

The upstream production is projected to lie between 2,600 and 2,650 thousand barrels of oil equivalent per day (boe/d), slightly lower than the year-ago figure of 2,672 thousand boe/d. However, Shell had earlier expected its third-quarter 2019 upstream volumes to be 50-100 thousand boe/d higher year over year. Compared with the prior-year quarter, the company expects to incur additional $250-$350 million well write-offs during this year’s third quarter.

Downstream

Shell projected its third-quarter oil product sales in the range of 6,700-7,350 thousand barrels per day assuming that the upper end of the estimate will be met. This indicates a 10% increase from the number reported in the third quarter of 2018. Meanwhile, the company expects to see a marginal fall in its chemical sales volumes.
However, this Netherlands-based company anticipate its refinery availability between 90% and 92%. Earlier this month, Shell successfully divested its SASREF refining joint venture. Consequently, the oil and gas supermajor will see a decline in chemical sales from 4.1 million tons in the third quarter of 2018 to 3.9-4 million tons in third-quarter 2019.

Integrated Gas

The company envisioned its third-quarter LNG liquefication volumes to increase 10-14% compared with its previous year’s quarterly output. Moreover, its segmental production is anticipated to lie in the 930-960 thousand boe/d band. In the year-earlier period, Shell produced 924 thousand boe/d.

The Zacks Consensus Estimate for third-quarter top and the bottom line is predicted to be $92.35 billion and $1.22 per share each.

This Zacks Rank #5 (Strong Sell) player is a global group of energy and petrochemical companies. This company is involved in all phases of the petroleum industry from exploration to final processing and delivery. It is scheduled to release third-quarter earnings on Oct 31, 2019. While its peers Chevron (CVX - Free Report) , ExxonMobil (XOM - Free Report) and BP plc (BP - Free Report) plan to release earnings performance around the same time.

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