Shell PLC's (LSE:SHEL, NYSE:SHEL) fourth-quarter production update tomorrow should give some insight into how it is dealing with the steady drip down in oil prices.
Even with a rally at the end of 2024 to $77 a barrel, crude prices have gone nowhere for a year, which might spur even greater emphasis on cost-cutting from chief executive Wael Sawan.
Green initiatives and strategy are also on investors’ minds, but tomorrow’s update will be number-heavy with strategy issues likely to be tackled with the full annual results at the end of the month.
Consensus is for adjusted earnings of US$25.1 billion in the 2024 financial year with cashflow of US$53 billion.
JP Morgan recently made Shell its top pick among the integrated oilers based on financial resilience and capacity to adapt to the evolving energy market.
This new world will see capital moving into low-carbon energy projects, increasing from 5-10% over the next three years to around 10% by 2027.
This shift is expected to boost free cash flow (FCF) — a measure of cash generated after covering costs and investments.
JP Morgan estimates that FCF at an oil price of $70 per barrel will be 11.2%, above the long-term average.