Oil major Shell (SHEL) has just updated the market on its expectations for the first quarter, and it’s a mixed bag. In a statement to the stock market, it broke down forecasts for the following divisions against fourth quarter data: Integrated Gas, Upstream, Marketing, Chemicals and Products, Renewables and Energy Solutions and Corporate.
The company expects a rise in Integrated Gas production in the first quarter of 2023, though it predicted an adjusted corporate loss on a tax hit.
Shell predicted an adjusted loss in its corporate segment between $900 million (£721 million) and $1.2 billion, widening from $600 million in the fourth quarter of 2022. This division reports separately from the group, whch reported record profits of $40 billion for the full year in February.
The outcome includes one-off tax charges, the company said. It expects Integrated Gas adjusted earnings pre-tax depreciation between $1.2 billion and $1.6 billion, compared to $1.4 billion in the fourth quarter.
Oil company profits have come under tax scrutiny recently and Shell is one of a number of companies to be paying the UK government’s windfall tax (as well as separate EU windfall taxes). Shell put a figure of $2 billion for its expected windfall tax charge in Q4. Energy firms have benefitted from robust oil prices, a stark contrast to a cost-of-living crisis consumers are suffering from.
Upstream adjusted earnings are expected between $2.8 billion to $3.1 billion, compared to $2.9 billion.
For Integrated Gas, it forecast production between 930,000-970,000 barrels of oil equivalent (boe), up from 917,000 boe in the fourth quarter.
Upstream production volumes are expected to be within a similar range to the previous quarter, between 1.8 million and 1.9 million boe per day, compared to 1.85 million in the fourth quarter.
Shell shares, which rose nearly 2% on Thursday trading, are rated as fairly valued by Morningstar analysts.
