Shell PLC has cautioned that quarter three results, due for release on 27 October, will be dented by a sharp fall in refining margins while results from its Integrated Gas business are expected to be significantly lower compared to the second quarter.
In a trading update, the oil and gas giant said refining margins in its chemicals and products division were US$15/barrel (bbl) compared to US$28/bbl in the second quarter, which is expected to take between US$1.0bn and US$1.4bn off adjusted EBITDA in quarter three.
The indicative chemicals margin is expected to be negative US$(27)/tonne, compared to a positive US$86/tonne in the second quarter 2022, with a financial hit of between US$300mln and US$600mln on third-quarter adjusted EBITDA.
Shell said trading and optimisation results for its Integrated Gas arm are expected to be significantly lower compared to the second quarter 2022 as a result of seasonality and substantial differences between paper and physical realisation in what it called a volatile and dislocated market.
There was better news from the marketing business where results are expected to be higher than the second quarter 2022, with sales volumes forecast of between 2,350 and 2,750 thousand barrels per day.
Production in the upstream unit is expected to be between 1,750 and 1,850 thousand barrels of oil equivalent per day and adjusted EBITDA is also expected to include non-cash one-off gains between US$0.8bn and US$1.0bn.
Shell said cash flow from operations (CFFO) was impacted at the end of August by working capital outflows of around US$2.5bn and it cautioned the prevailing volatility could lead to additional outflows in CFFO in September from the combined effect of price impacts on inventory, changes in inventory volumes margining effects on derivatives and movements in accounts payable and receivables balances.