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Shell’s Earnings Are Expected to Fall More than BP’s in Q1

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Peer comparison

Royal Dutch Shell (RDS.A) is expected to post an 18% YoY (year-over-year) earnings fall in the first quarter—more than that of BP. BP’s EPS are expected to fall 10% YoY to $0.70.

In comparison, ExxonMobil (XOM) and Chevron (CVX) could post higher falls in their earnings. ExxonMobil’s EPS are expected to fall 21% YoY to $0.87. Chevron’s EPS are expected to fall 25% YoY to $1.42.

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Shell’s first-quarter estimates

Shell is expected to post EPS (earnings per American depositary share) of $1.08 in the first quarter, ~18% lower than its adjusted EPS in the first quarter of 2018. Its first-quarter estimated EPS are ~22% lower than its fourth-quarter adjusted EPS. Shell’s revenue is expected to be ~$86.6 billion in the quarter, 3% lower than its revenue in the first quarter of 2018.

Shell’s upstream and integrated gas earnings are likely to be affected by decreased oil prices in the first quarter compared to the first quarter of 2018. WTI fell 13% YoY to $55 per barrel in the first quarter.

According to Shell’s latest guidance, its integrated gas production volumes, liquefied natural gas liquefication volumes, and upstream production volumes are expected to fall YoY in the first quarter due to divestitures, maintenance, and field declines. A decrease in realizations plus a fall in volumes could lead to lower upstream and integrated gas earnings for the company.

Shell’s downstream earnings are also expected to fall due to weaker refining cracks YoY in the first quarter. The company’s refining throughput could also be lower in the quarter on account of higher maintenance activities.

Overall, lower downstream earnings and weaker upstream and integrated gas earnings could affect Shell’s total earnings in the quarter.

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