Shell rises after flagging strong gas trading in 4Q

Shell rises after flagging strong gas trading in 4Q
© Reuters.

By Geoffrey Smith — Shell (LON:SHEL) stock rose in early trade on Friday after the oil and gas giant said it had a strong fourth quarter for gas trading, despite the sharp fall in natural gas prices in the period.

Shell said in a brief trading update on the past quarter that it expects trading and optimization at its Integrated Gas division to be “significantly higher” than in the three months through September, with adjusted earnings of between $1.2 billion and $1.6 billion before tax and depreciation.

The company also quantified the hit it expects to take from recent initiatives in the U.K. and Europe to claw back some of the windfall profits made by the oil and gas industry last year. It said it expected to pay some $2B due to the EU’s planned “Solidarity Charge” and the U.K.’s Energy Profits Levy, although there will be minimal cash impact on the fourth-quarter results due to the timing of the payments. The news takes Shell’s overall hit to just under $2.4B, as It had already disclosed expected liabilities of $360 million.

Elsewhere in its update, Shell said its refining margin widened to around $19 a barrel in the last three months of the year, from $15 in the previous quarter, while its margin on chemicals widened to $32 a ton from $27. However, it noted weaker trading and optimization, along with the start of depreciation at its new Polymers Monaca chemicals plant in Pennsylvania.

Shell’s stock has essentially gone sideways for the last seven months as its underlying gas and oil markets peaked, then started to weaken in response to signs that high prices were eating into global demand. By 03:45 ET (08:45 GMT), Shell stock was up 1.2%, outperforming a 0.3% rise in the benchmark FTSE 100 index.