Shell shares rose more than 2% in early London trading on Tuesday after the company slightly raised its second-quarter production outlook.
Shell Raises Q2 Production Outlook
Shell lifted parts of its second-quarter guidance, giving investors a more positive update ahead of its upcoming results.
However, the energy giant also warned that Integrated Gas production would fall sharply compared with the first quarter.
The decline is mainly linked to the impact of the Middle East conflict on Qatari production volumes.
Integrated Gas Output Still Below Q1 Levels
Shell now expects Integrated Gas production to range between 610,000 and 650,000 barrels of oil equivalent per day.
This is higher than the previous guidance of 580,000 to 640,000 boe/d.
Still, it remains well below the 909,000 boe/d reported in the first quarter.
LNG liquefaction volumes are now expected between 7.4 million and 7.8 million tonnes. That is above the previous forecast of 6.8 million to 7.4 million tonnes, but slightly below the 7.9 million tonnes produced in the first quarter.
Shell also said trading and optimisation in the Integrated Gas division should be significantly stronger than in the first quarter.
Upstream Production Guidance Improves
Shell also raised its Upstream production outlook.
The company now expects Upstream output between 1.75 million and 1.85 million boe/d.
That compares with the previous guidance range of 1.62 million to 1.82 million boe/d.
In the first quarter, Upstream production stood at 1.843 million boe/d.
Refining and Chemicals Margins Strengthen
In its Chemicals and Products division, Shell said its indicative refining margin is tracking at around $20 per barrel.
That is up from $17 per barrel in the first quarter.
The indicative chemicals margin also improved sharply, rising to around $240 per tonne from $139 per tonne.
However, Shell noted that market disruptions mean realised refining and chemicals margins are lower than the calculated indicative margins.
Refinery Utilisation Near Full Capacity
Shell expects refinery utilisation to be close to 100% in the second quarter.
That is slightly above the 99% level reported in the first quarter.
Chemicals utilisation is expected between 80% and 84%, down from 85% in the previous quarter.
Trading and optimisation in the Chemicals and Products division is expected to remain broadly in line with the first quarter.
Marketing and Renewables Outlook
Shell expects marketing sales volumes between 2.55 million and 2.65 million barrels per day.
Adjusted earnings in the marketing segment are expected to be similar to the first quarter.
In Renewables and Energy Solutions, adjusted earnings are forecast in a wide range between a $0.3 billion loss and a $0.3 billion profit.
That compares with a $0.3 billion profit in the first quarter.
Corporate Loss Expected to Narrow
Shell expects its Corporate segment to report a smaller loss of $0.5 billion to $0.7 billion.
This would be an improvement from the $0.9 billion loss recorded in the first quarter.
At the group level, working capital movements are expected to turn positive.
Shell forecasts a working capital inflow of $1 billion to $6 billion, compared with an $11.2 billion outflow in the first quarter.
The company said this reflects the impact of extreme volatility in commodity prices.
Shell Q2 Results Date
Shell expects tax payments between $2.6 billion and $3.4 billion, up from $2.3 billion in the first quarter.
The company said its outlook reflects the ongoing situation in the Middle East.
Shell also warned that full-year price and margin sensitivities may not fully reflect realised margin movements in a single quarter.
Shell is scheduled to publish its second-quarter results on July 30. Consensus estimates are expected on July 22.
