Shell has revised down its natural gas and liquefied natural gas (LNG) production expectations for the first quarter of this year, citing adverse weather conditions such as cyclones and unplanned maintenance in Australia.
The company now expects gas production to be between 910,000 and 950,000 barrels of oil equivalent per day, lower than the previous estimate of 930,000 to 990,000 barrels. Despite the cut, this guidance still represents an increase from the 905,000 barrels of output in the fourth quarter of last year.
Shell also revised its LNG volume forecast, now expecting production to range between 6.4 million and 6.8 million metric tons for the first quarter, down from an earlier estimate of 6.6 million to 7.2 million metric tons.
Upstream production, which covers natural gas and crude oil extraction, is now projected to be between 1.79 million and 1.89 million barrels of oil equivalent per day, compared to the prior forecast of 1.75 million to 1.95 million barrels.
Shell’s share price fell 4.7% on the London Stock Exchange on Monday afternoon in response to the revised outlook.
Russ Mould, investment director at AJ Bell, noted that Shell’s dominant position in natural gas is one of its key strengths, and shareholders may be disappointed by the underperformance in this area. “Under CEO Wael Sawan, Shell has been working to improve its performance and compete with its U.S. peers, performing better than BP in recent times,” Mould said. Sawan’s focus has been on reducing costs, controlling spending, and cutting net debt, while scaling back green investments to prioritize viable projects.
Shell is expected to report its full first-quarter results on May 2.
