Shell takes up to $200mn hit from Texas storm

Anglo-Dutch Shell has warned it expects to take up to a $200mn hit to adjusted earnings in the first quarter from the Texas winter storm in February, the company said in an update on April 7.

The major expects its upstream adjusted earnings to be up to $40mn lower as a result of the storm, which led to a cut in production during the three-month period of 10,000-20,000 barrels of oil equivalent/day. It also warned of up to a $80mn reduction in adjusted earnings from oil products and around a $60mn cut in earnings from chemicals.

Shell said the impact to its integrated gas division should be limited.

The company expects its integrated gas production to average 920,000-960,000 boe/d, which is roughly in line with the level a year ago, with liquefaction volumes expected to total 7.8-8.4mn metric tons. The company warned of $1.3-1.4bn in pre-tax depreciation from the segment, and "significantly below average" trading and optimisation results. It expects a limited impact from the spike in LNG prices in January, as 80% of its LNG sales are linked to oil prices with a six-month lag.

Shell anticipates upstream production averaging 2.400-2.475mn boe/d in the three-month period. Its adjusted earnings from the business should be positive, given the rally in prices early this year. But it expects to book $3.1-3.4bn in pre-tax depreciation and up to $200mn in foreign exchange losses from the segment.

The oil major suffered a 71% slump in adjusted earnings in 2020 to $4.85bn, but nevertheless decided to raise its first-quarter dividends by 4% to $0.1735/share.