Shell PLC said weekend that it expects to take a $2 billion hit for the fourth-quarter from additional taxes in the European Union and the U.K. government’s energy windfall tax, and that its integrated gas trading and optimization results significantly rose on quarter.
Recently announced additional taxes in the European Union, and the deferred tax hit from the increased U.K. government’s energy profits levy are expected to amount to around $2 billion for the fourth quarter.
The company said the taxes and levies will be reported as identified items, and so won’t affect fourth-quarter adjusted earnings. They will have a limited cash hit in the fourth quarter given the expected timing of payments.
The energy group said production for the fourth quarter in Integrated Gas is anticipated to be between 900,000 and 940,000 barrels of equivalent oil per day compared with 924,000 barrels in the third quarter and prior guidance of 910,000 to 960,000 barrels. This reflects a longer-than-expected outage at its Prelude site.
Liquefaction volumes guidance has also been lowered to 6.6 million to 7.0 million metric tons, from prior guidance of 7.0 million to 7.6 million tons.
It said it expects fourth-quarter pretax depreciation of between $1.2 billion and $1.6 billion.
On a corporate level, the company expects to post an adjusted earnings loss of $550 million to $750 million.
Shell said it expects fourth quarter upstream production of 1.8 million to 1.9 million barrels of oil equivalent a day compared with 1.8 million in the third quarter, and that it expects a pretax depreciation between $3.1 billion and $3.5 billion. It had previously forecast fourth-quarter upstream production of 1.8 million to 2.0 million barrels a day.
Marketing results are expected to be lower than in the third quarter, with sales expected to be between 2.4 million and 2.8 million barrels of oil a day compared with 2.6 million barrels a day quarter prior, the company said. It had previously forecast fourth-quarter marketing sales volumes of 2.3 million to 2.8 million a day.
In the chemicals and products division, the indicative refining margin is expected to be $19 a barrel compared with $15 a barrel in the prior quarter. The indicative chemical margin is expected to swing to positive $37 a ton, from negative $27 a ton a quarter prior.
However, trading and optimization and chemicals results are expected to fall on quarter due to the beginning of depreciation for its Pennsylvania project, Shell Polymers Monaca. For the third quarter, it reported refining and trading sales volumes of 1.8 million barrels a day.
By Joe Hoppe
