Shell Raises Q2 Upstream Outlook, Flags Qatar Gas Hit as Shares Rise

Shell lifted parts of its second-quarter production outlook on Tuesday, helping lift its shares more than 2% in early London trading, even as the energy major warned that disruptions linked to the Middle East conflict would significantly reduce Integrated Gas production from first-quarter levels.

The company now expects Integrated Gas production to reach between 610,000 and 650,000 barrels of oil equivalent per day (boe/d), an improvement from its previous guidance of 580,000 to 640,000 boe/d. However, the forecast remains well below the 909,000 boe/d reported in the first quarter due to lower production volumes from Qatar.

Shell also raised its outlook for LNG liquefaction volumes to between 7.4 million and 7.8 million tonnes, compared with its earlier guidance of 6.8 million to 7.4 million tonnes. Despite the upgrade, the figure remains below the 7.9 million tonnes produced in the first quarter. The company expects trading and optimization in its Integrated Gas division to be significantly stronger than in the previous quarter.

Upstream production guidance was also increased to 1.75 million-1.85 million boe/d from the previous 1.62 million-1.82 million boe/d range, broadly in line with the first quarter's output of 1.843 million boe/d.

In its Chemicals and Products business, Shell said indicative refining margins improved to around $20 per barrel from $17 in the first quarter, while indicative chemicals margins climbed to roughly $240 per tonne from $139. However, the company cautioned that actual realized margins remain lower due to ongoing market disruptions. Refinery utilization is expected to approach 100%, while chemicals utilization is forecast at 80%-84%.

Marketing sales volumes are projected at 2.55 million-2.65 million barrels per day, with adjusted earnings expected to match first-quarter performance. Shell also expects Renewables and Energy Solutions to report adjusted earnings ranging from a $300 million loss to a $300 million profit, while Corporate losses are expected to narrow.

At the group level, Shell forecasts a positive working capital movement of $1 billion-$6 billion after an $11.2 billion outflow in the first quarter, reflecting easing commodity price volatility. Tax payments are expected to rise to $2.6 billion-$3.4 billion.

Shell said its outlook reflects ongoing geopolitical uncertainty in the Middle East. The company is scheduled to release its second-quarter earnings on July 30, with analyst consensus estimates due on July 22.