Shell Warns of Further Upstream Losses in Q4

Shell expects to incur another adjusted loss from its upstream business in the fourth quarter because of weak prices, the Anglo-Dutch major said in an earnings update on December 21.

Upstream production is forecast to average 2.275-2.35mn barrels of oil equivalent/day during the three months, versus an earlier guidance of 2.3-2.5mn boe/d. Output has been affected by the impact of hurricanes in the US Gulf of Mexico and mild weather in northern Europe, the company said. Its upstream business produced 2.2mn boe/d in the third quarter.

Shell expects to book $100-200mn in depreciation charges and $600-900mn in tax charges in Q4 across its upstream operations. The company suffered adjusted upstream losses of $1.5bn in Q2 and $884mn in Q3.

Output at Shell's integrated gas segment is seen averaging 900,000-940,000 boe/d, up from an earlier forecast of 830,000-870,000 boe/d, with liquefaction volumes expected at 8.0-8.6mn metric tons, compared with an earlier guidance of 7.9-8.5mn mt. The company noted that 80% of its LNG sales were indexed to oil prices with a lag effect of up to six months.