By Christian Moess Laursen and Pierre Bertrand

Shell expects first-quarter gas production to beat its guidance after a strong start to the year, but for earnings to be lower than the prior quarter.

The British energy giant said Friday that it expects to report integrated gas production of 960,000 to 1 million barrels of oil-equivalent a day for the first quarter, above its guided range of 930,000-990,000 barrels a day and compared with 901,000 barrels in the fourth quarter of last year.

Adjusted integrated gas earnings for the quarter are expected to be between $1.2 billion and $1.6 billion compared with $2.3 billion in prior quarter. Stripping out oil price changes on inventory carrying amounts and removing the effects of identified items fourth quarter earnings were $1.5 billion.

At Shell, its integrated-gas unit, which houses the business that sells liquefied natural gas, is a core operation that generates a significant chunk of profit and cash flow.

The company is the first of Europe's oil and gas companies to provide an update on its production and earnings outlook for the first quarter and it comes after it and peers face concerns that their natural-gas businesses could face further pressure after natural gas prices dropped last year compared with 2022 when prices spiked after Russia's invasion of Ukraine.

Natural gas prices for Shell's European peers--BP, TotalEnergies, Repsol and Eni--fell steeply in 2023. They all reported strong declines in the fourth quarter as well, if not as deep. Natural gas prices at France's TotalEnergies and Spain's Repsol, for example, fell 59% in 2023 and both posted drops of about 50% in the fourth quarter.

Shell expects its liquefied natural gas volume between 7.2 million and 7.6 million metric tons in the first quarter, compared with its prior expectation of 7.0 million-7.6 million tons.

The FTSE 100 leader by market cap expects upstream production--the extraction of crude oil and natural gas--to be 1.82 million to 1.92 million barrels of oil a day in the quarter, beating its guidance of 1.73 million-1.93 million barrels a day. Production for the fourth quarter was 1.87 million barrels a day.

Upstream earnings in the quarter are expected to be between $2.7 billion and $3.1 billion, compared with $3.9 billion in the fourth quarter. Shell added that it expected around $600 million in exploration well-related write-offs in the first quarter, mainly in Albania.

Shell's first-quarter results are scheduled to be published on May 2, while BP will publish its results on May 7. Eni will disclose its 1Q results on April 24, Repsol on April 25 and TotalEnergies will publish its results on April 26.

Write to Christian Moess Laursen at and Pierre Bertrand at

(END) Dow Jones Newswires

04-05-24 0717ET