Shell on Thursday reported a fall in second quarter earnings due to lower liquefied natural gas trading and optimization results, lower realized oil and gas prices, lower refining margins, and lower volumes. Here's what the oil major had to say:


On integrated gas:


"Segment earnings, compared with the first quarter 2023, reflected the effect of lower contributions from trading and optimization due to seasonality and fewer optimization opportunities and lower realized prices (decrease of $2,413 million), and unfavorable deferred tax movements (decrease of $90 million), partly offset by higher volumes (increase of $55 million)."


"Second-quarter 2023 segment earnings included net impairment charges and reversals of $1,438 million mainly in North America, and unfavorable movements of $293 million due to the fair value accounting of commodity derivatives."


"Total oil and gas production, compared with the first quarter 2023, increased by 2% mainly due to the ramp-up of new fields, and lower maintenance."


On upstream:


"Segment earnings, compared with the first quarter 2023, mainly reflected lower prices (decrease of $741 million) and lower volumes (decrease of $718 million), partly offset by lower operating expenses (decrease of $116 million) and lower depreciation, depletion and amortization charges (decrease of $54 million)."


"Second-quarter 2023 segment earnings also included charges of $127 million due to Brazil Oil export tax and a $65 million charge relating to impairments, partly offset by gains of $92 million related to the impact of the strengthening Brazilian real on a deferred tax position. These gains and losses are part of identified items, and compare with the first quarter 2023 which amounted to a net loss of $21 million."


"Total production, compared with the first quarter 2023, decreased mainly due to scheduled maintenance and divestments, partly offset by growth from new fields."


On marketing:


"Segment earnings, compared with the first quarter 2023, reflected higher marketing margins (increase of $153 million) mainly driven by seasonal effects and improved unit margins in Mobility, partly offset by lower margins in Lubricants and Sectors & Decarbonization. The second quarter 2023 also included lower taxes (decrease of $41 million). These net gains were partly offset by higher operating expenses (increase of $173 million)."


"Second-quarter 2023 segment earnings also included a gain of $88 million related to indirect tax credits. This gain is part of identified items, and compares with the first quarter 2023 which included a gain of $210 million related to similar indirect tax credits."


"Marketing sales volumes (comprising hydrocarbon sales), compared with the first quarter 2023, increased mainly due to seasonal effects."


On chemicals and products:


"Segment earnings, compared with the first quarter 2023, reflected lower products margins (decrease of $1,099 million) mainly driven by lower refining margins and lower contributions from trading and optimization, and lower Chemicals margins (decrease of $80 million) including weaker demand and lower income from joint ventures and associates. Segment earnings also reflected higher operating expenses (increase of $122 million) due to higher maintenance spend and provisions for site restoration."


"Second quarter 2023 segment earnings also included impairment charges of $76 million. These losses are part of identified items, and compare with the first quarter 2023 which included favorable movements of $134 million due to the fair value accounting of commodity derivatives, and impairment charges of $72 million."


"Chemicals manufacturing plant utilization was 70% compared with 71% in the first quarter 2023."


"Refinery utilization was 85% compared with 91% in the first quarter 2023 due to higher planned and unplanned maintenance."


On renewables and energy solutions:


"Segment earnings, compared with the first quarter 2023, reflected higher operating expenses (increase of $99 million), and lower margins (decrease of $75 million) mainly from trading and optimization results in the Americas due to seasonally lower demand and decreased volatility, partly offset by lower taxes (decrease of $63 million)."


"Second quarter 2023 segment earnings also included favorable movements of $310 million due to the fair value accounting of commodity derivatives."


On 3Q outlook:


"Cash capital expenditure range for the full year has been lowered and is expected to be within $23 - 26 billion."


"Integrated gas production is expected to be approximately 870 - 930 thousand boe/d. LNG liquefaction volumes are expected to be approximately 6.3 - 6.9 million tons. Production and LNG liquefaction outlook reflects scheduled maintenance (including Prelude and Trinidad and Tobago)."


"Upstream production is expected to be approximately 1,600 - 1,800 thousand boe/d. Production outlook reflects scheduled maintenance across the portfolio."


"Marketing sales volumes are expected to be approximately 2,450 - 2,950 thousand b/d."


"Refinery utilization is expected to be approximately 82% - 90%. Chemicals manufacturing plant utilization is expected to be approximately 67% - 75%."


"Corporate adjusted earnings are expected to be a net expense of approximately $500 - $700 million in the third quarter 2023 and a net expense of approximately $2,400 - $2,800 million for the full year 2023. This excludes the impact of hedge effectiveness and currency exchange rate effects."

Shares at 0749 GMT were down 42.50 pence, or 1.8%, at 2,354.0 pence.


Write to Ian Walker at ian.walker@wsj.com


(END) Dow Jones Newswires

07-27-23 0421ET