Shell Plc’s earnings from natural gas trading will be significantly lower in the second quarter due to seasonal changes in the market.
Oil and gas production will also be down compared to the first three months of the year due to field maintenance, while the company’s chemicals business is expected to be loss-making, Shell said in an update earlier of its full results later this month.
Extreme swings in European natural gas prices last year helped push Shell’s profits to record levels, with unit trading accounting for up to a quarter of global profitability. The strong performance continued this year, helping the company deliver its best ever first quarter, but conditions were less favorable in the following months.
Shares were slightly lower in early trading in London.
“Unit earnings are expected to be significantly lower compared to a strong first quarter due to seasonality and fewer opportunities for optimization,” Shell said in a statement. The division’s performance returned to the average levels seen in 2021 and 2022.
According to Biraj Borkhataria, analyst at RBC Europe Ltd, a weaker trading result was expected after exceptional results in recent quarters. “Overall, we view the statement as neutral given that most operating indicators are in line with market expectations,” he wrote in a note.
Shell’s U.S. peer Exxon Mobil Corp. has said its second-quarter earnings will fall by about $4 billion compared with the first three months of the year due to lower natural gas prices and oil refining margins. The American major is looking to create a trading business to compete with European giants such as Shell.
