This is an update to the third quarter 2019 outlook provided in the second quarter results announcement on August 1, 2019. The impacts presented here may vary from the actual results and are subject to finalisation of the third quarter 2019 results which are scheduled to be released on October 31, 2019.
Presented earnings impacts relate to earnings on a current cost of supplies basis, attributable to shareholders excluding identified items unless stated otherwise.
Integrated gas
Production is expected to be between 930 and 960 thousand barrels of oil equivalent per day. LNG liquefaction volumes are expected to be between 9.00 and 9.30 million tonnes. For the third quarter, Shell expects to deliver strong trading and optimisation performance. Note that more than 80% of its term contracts for LNG sales in 2018 were oil price linked with a price-lag of typically 3-6 months, as per previous disclosures. Note that, as in previous quarters, CFFO in Integrated Gas can be impacted by margining resulting from movements in the forward commodity curves. Upstream,
Production is expected to be between 2,600 and 2,650 thousand barrels of oil equivalent per day. During the third quarter there have been additional well write-offs in the range of $250-$350 million compared to Q3 2018, for which no cash impact is expected. Natural Gas Liquids and gas prices continue to be disconnected from Brent compared to Q3 2018 In July, the company completed the divestment of the Caesar-Tonga asset and its Upstream interests in Denmark.
Downstream
Refinery availability is expected to be between 90% and 92%. Oil Products sales volumes are expected to be between 6,700 and 7,350 thousand barrels per day. Chemicals manufacturing plant availability is expected to be between 90% and 92%. Chemicals sales volumes are expected to be between 3,900 and 4,000 thousand tonnes. Shell expects chemicals cracker and intermediate margins to be materially unchanged from Q2 2019. In September, it completed the divestment of its interest in the SASREF refining joint venture.
Corporate
Corporate earnings excluding identified items are expected to be a net charge between $700 – 850m, this excludes the impact of currency exchange rate effects. Currency exchange rate movements, including a weakening of the Brazilian Real, is expected to have a negative earnings impact on top of the provided range.
Other
As per previous disclosures, price sensitivity at Shell group level is $6bn per annum per $10 per barrel Brent price movement. Note that this price sensitivity is appropriate for smaller price changes, and is best used for full-year numbers.
Consensus
The consensus collection for quarterly earnings and CFFO, managed by VARA research, is scheduled to be opened for submission on October 10, 2019, close on October 23, 2019, and made public on October 24, 2019.