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Shell (SHEL) Q2 Earnings Coming Up: Here's What to Expect
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Shell plc (SHEL - Free Report) is set to release second-quarter results on Aug 1. The current Zacks Consensus Estimate for the to-be-reported quarter is earnings of $1.82 per share on revenues of $88.6 billion.
Let’s delve into the factors that might have influenced the integrated energy behemoth’s results in the June quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, Europe’s largest oil company beat the consensus mark, backed by strong oil trading and lower costs. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $2.38, well above the Zacks Consensus Estimate of $1.87. However, revenues of $74.7 billion came in 15.1% below the Zacks Consensus Estimate due to lower natural gas realizations.
Shell beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 9.2%, on average. This is depicted in the graph below:
The Zacks Consensus Estimate for the first-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 21.3% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 16.6% increase from the year-ago period.
Factors to Consider
Earlier this month, Shell released a preliminary report for the April-June period, which expects a $2 billion impairment in the period after pausing its Rotterdam biofuels facility and divesting its Singapore refinery. Rotterdam's construction halt leads to a $600 million to $1 billion non-cash charge, while Singapore sees $600 million to $800 million in charges.
Now, let’s dig into some other segment-wise selected items from that release.
Upstream: According to the latest update, Shell’s upstream production fell 5.4% on a sequential basis in the second quarter of 2024 at the midpoint of the guidance. The supermajor is estimating its output in the range of 1,720-1,820 (thousand barrels of oil equivalent per day) MBOE/d compared to 1,872 MBOE/d in the first quarter of 2024. Tax charges are expected to hurt earnings in the range of $1.8-$2.6 billion.
Meanwhile, Shell expects the share of profit of joint ventures and associates to be around $200 million. The segment’s results are also likely to include well write-offs to the tune of $200 million. Finally, operating expense for the segment is projected at around $2.4 billion.
Integrated Gas: Shell’s LNG liquefaction volumes are expected in the range of 6.8-7.2 million tons, translating into a decrease of around 7.7% sequentialy. Shell’s integrated gas production is expected in the range of 940,000-9800,000 barrels of oil equivalent per day (BOE/d) or 960,000 BOE/d at the midpoint. It was 992,000 BOE/d in the January-March period.
Per the company, second-quarter trading and optimization results in its integrated gas unit will be “in line” with the second quarter of 2023 but won’t measure up to the previous quarter due to seasonality. Segment operating cost is expected between $1 billion and $1.2 billion.
Marketing: The midpoint of management’s marketing sales volume guidance is 2.900 million barrels per day, higher than the 2.763 million barrels achieved in the first quarter of 2024. Overall, segment profits are expected to be in line with the quarter-ago levels, while operating expenses would be between $2.5 billion and $2.9 billion.
Chemicals & Products: The company expects a sequentially flat trajectory in its Trading & Optimisation results for the second quarter of 2024. As projected by Shell, the refining margin may have weakened in the same period, with the metric deteriorating 34.6% sequentially. But with chemical margins moving up 3%, realized chemicals sub-segment numbers are expected to be better than the first quarter. Shell also forecast refinery utilization of 91-95%, operating expense of $1.9-$2.3 billion and chemicals manufacturing plant utilization of 78-82%.
Renewables and Energy Solutions: The adjusted bottom line of this segment is expected to hover between a loss of $500 million and a profit of $100 million.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Shell is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -5.67%.
Zacks Rank: Shell currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Shell, here are some firms from the energy space that you may want to consider on the basis of our model:
Enterprise Products Partners L.P. (EPD - Free Report) has an Earnings ESP of +4.25% and a Zacks Rank #3. The firm is scheduled to release second-quarter earnings on Jul 30.
The 2024 Zacks Consensus Estimate for Enterprise Products Partners indicates 7.5% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of 1%, on average. Valued at around $64.5 billion, EPD has gone up 9.8% in a year.
Northern Oil and Gas (NOG - Free Report) has an Earnings ESP of +1.73% and a Zacks Rank #3. The firm is scheduled to release second-quarter earnings on Jul 30.
Over the past 30 days, the Zacks Consensus Estimate for Northern Oil and Gas’ 2024 earnings has moved up 0.8%. It has a trailing four-quarter earnings surprise of 4.5%, on average. Valued at around $3.9 billion, NOG has inched up 2.5% in a year.
Transocean Ltd. (RIG - Free Report) has an Earnings ESP of +20.67% and a Zacks Rank #3. The firm is scheduled to release second-quarter earnings on Jul 31.
Transocean’s expected EPS growth rate for three to five years is currently 32.6%, which compares favorably with the industry's growth rate of 17.6%. It has a trailing four-quarter earnings surprise of 11.8%, on average. Valued at around $5 billion, RIG has lost 29% in a year.
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Shell (SHEL) Q2 Earnings Coming Up: Here's What to Expect
Shell plc (SHEL - Free Report) is set to release second-quarter results on Aug 1. The current Zacks Consensus Estimate for the to-be-reported quarter is earnings of $1.82 per share on revenues of $88.6 billion.
Let’s delve into the factors that might have influenced the integrated energy behemoth’s results in the June quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, Europe’s largest oil company beat the consensus mark, backed by strong oil trading and lower costs. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $2.38, well above the Zacks Consensus Estimate of $1.87. However, revenues of $74.7 billion came in 15.1% below the Zacks Consensus Estimate due to lower natural gas realizations.
Shell beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 9.2%, on average. This is depicted in the graph below:
Shell PLC Unsponsored ADR Price and EPS Surprise
Shell PLC Unsponsored ADR price-eps-surprise | Shell PLC Unsponsored ADR Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the first-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 21.3% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 16.6% increase from the year-ago period.
Factors to Consider
Earlier this month, Shell released a preliminary report for the April-June period, which expects a $2 billion impairment in the period after pausing its Rotterdam biofuels facility and divesting its Singapore refinery. Rotterdam's construction halt leads to a $600 million to $1 billion non-cash charge, while Singapore sees $600 million to $800 million in charges.
Now, let’s dig into some other segment-wise selected items from that release.
Upstream: According to the latest update, Shell’s upstream production fell 5.4% on a sequential basis in the second quarter of 2024 at the midpoint of the guidance. The supermajor is estimating its output in the range of 1,720-1,820 (thousand barrels of oil equivalent per day) MBOE/d compared to 1,872 MBOE/d in the first quarter of 2024. Tax charges are expected to hurt earnings in the range of $1.8-$2.6 billion.
Meanwhile, Shell expects the share of profit of joint ventures and associates to be around $200 million. The segment’s results are also likely to include well write-offs to the tune of $200 million. Finally, operating expense for the segment is projected at around $2.4 billion.
Integrated Gas: Shell’s LNG liquefaction volumes are expected in the range of 6.8-7.2 million tons, translating into a decrease of around 7.7% sequentialy. Shell’s integrated gas production is expected in the range of 940,000-9800,000 barrels of oil equivalent per day (BOE/d) or 960,000 BOE/d at the midpoint. It was 992,000 BOE/d in the January-March period.
Per the company, second-quarter trading and optimization results in its integrated gas unit will be “in line” with the second quarter of 2023 but won’t measure up to the previous quarter due to seasonality. Segment operating cost is expected between $1 billion and $1.2 billion.
Marketing: The midpoint of management’s marketing sales volume guidance is 2.900 million barrels per day, higher than the 2.763 million barrels achieved in the first quarter of 2024. Overall, segment profits are expected to be in line with the quarter-ago levels, while operating expenses would be between $2.5 billion and $2.9 billion.
Chemicals & Products: The company expects a sequentially flat trajectory in its Trading & Optimisation results for the second quarter of 2024. As projected by Shell, the refining margin may have weakened in the same period, with the metric deteriorating 34.6% sequentially. But with chemical margins moving up 3%, realized chemicals sub-segment numbers are expected to be better than the first quarter. Shell also forecast refinery utilization of 91-95%, operating expense of $1.9-$2.3 billion and chemicals manufacturing plant utilization of 78-82%.
Renewables and Energy Solutions: The adjusted bottom line of this segment is expected to hover between a loss of $500 million and a profit of $100 million.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Shell is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -5.67%.
Zacks Rank: Shell currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Shell, here are some firms from the energy space that you may want to consider on the basis of our model:
Enterprise Products Partners L.P. (EPD - Free Report) has an Earnings ESP of +4.25% and a Zacks Rank #3. The firm is scheduled to release second-quarter earnings on Jul 30.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The 2024 Zacks Consensus Estimate for Enterprise Products Partners indicates 7.5% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of 1%, on average. Valued at around $64.5 billion, EPD has gone up 9.8% in a year.
Northern Oil and Gas (NOG - Free Report) has an Earnings ESP of +1.73% and a Zacks Rank #3. The firm is scheduled to release second-quarter earnings on Jul 30.
Over the past 30 days, the Zacks Consensus Estimate for Northern Oil and Gas’ 2024 earnings has moved up 0.8%. It has a trailing four-quarter earnings surprise of 4.5%, on average. Valued at around $3.9 billion, NOG has inched up 2.5% in a year.
Transocean Ltd. (RIG - Free Report) has an Earnings ESP of +20.67% and a Zacks Rank #3. The firm is scheduled to release second-quarter earnings on Jul 31.
Transocean’s expected EPS growth rate for three to five years is currently 32.6%, which compares favorably with the industry's growth rate of 17.6%. It has a trailing four-quarter earnings surprise of 11.8%, on average. Valued at around $5 billion, RIG has lost 29% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.