Shell Integrated Gas Earnings up 31%

Anglo-Dutch major Shell reported a 31% year on year increase in its first-quarter earnings for its integrated gas business April 26, thanks to higher prices and higher production.

Earnings of $2.39bn included the $578mn sale to OMV of assets in New Zealand. Liquefaction volumes were up 9% to 8.9mn mt, while LNG sales were up 17% to 18.6mn mt. More is on the way, with the start-up of the Prelude floating LNG project (pictured above), now said to be commissioning. Gas production for sale was up 33% at 4.4bn ft³/d.

Compared with the first quarter 2017, total integrated gas production increased by 31%, mainly due to higher volumes from Pearl gas-to-liquids in Qatar; and Gorgon LNG offshore Australia, it said.

Shell's Upstream turned last year's $530mn loss into a gain of $1.85bn, a third of which – $606mn – came from asset sales in Iraq and Malaysia. The company as a whole saw profits rise by 42%, up from $3.8bn to $5.3bn, thanks to higher prices.  Output was down by 5%, compared with the same quarter a year ago, following the sale of assets in the UK North Sea, oil sands interests in Canada, and onshore assets in Gabon. This was partly offset by new fields ramping up. Excluding portfolio impacts, production was 4% higher than in the same quarter a year ago, it said. Gas production for sale was down 1% to 7.5bn ft³/d. 

For the second quarter, upstream production is expected to be 230-260,00o boe/d lower. This is mainly due to portfolio impacts, higher maintenance, lower production by NAM at the Groningen field in the Netherlands, and field decline more than offsetting project start-ups, it said.

CEO Ben van Beurden said: “Shell’s strong earnings this quarter were underpinned by higher oil and gas prices, the continued growth and very good performance of our Integrated Gas business, and improved profitability in our Upstream business. Less favourable refining market conditions and lower contributions from trading impacted the earnings of our downstream business." This week it announced the sale of its Argentine downstream business for close to $1bn, but that will not register in the company's finances for a while. Shell's upstream activity in the Vaca Muerta shale in Argentina is unaffected by the sale.

Gearing ended the quarter at 24.7%, down from 28.3% at the end of the year-prior quarter and of its 2016-18 $30bn divestment programme, undertaken to finance its purchase of BG as well as to high-grade its portfolio, $26bn is complete and there is another $6bn or so announced or in advanced progress, taking it ahead of its target.