Rachel Millard
Fri, October 22, 2021
Shell
Major oil companies are expected to reveal booming profits after global gas prices soared.
Shell is forecast to post quarterly revenue of $2.1bn (£1.5bn) for its natural gas division when it reports on Thursday, an almost three-fold increase on the same quarter last year.
Gas prices have climbed globally amid a global crunch in supplies, with Asian spot liquified natural gas prices four times higher than during the third quarter of 2020.
The rally is leading to painful increases in household bills across Britain and Europe, while factories have been forced to curb output.
None the less, higher prices mean windfalls for producers as well as potentially for the pension pots invested in their stocks.
Oil prices have also climbed, with Brent Crude rising more than 60pc since the start of the year to more than $85 on Friday.
Shell’s shares have climbed 35pc this year, to 1,749p, while BP’s have climbed 40pc to 356p.
Analysts at HSBC expect cash flows for the third quarter - covering July to September - among integrated oil companies to be double than those of a year ago.
“The strength of oil and gas prices means the companies are even more free cash positive than we had already expected,” they said.
“While some of this excess free cash should enable them to accelerate low-carbon spending, much of it is likely to be seen in cash returns to shareholders.”
Shell is reaping the rewards of its £47bn purchase of rival BG Group, a major liquefied natural gas producer, in 2016.
FTSE 100 rival BP is set to report third quarter results on November 2.
HSBC believes its results “will show the strength of its excess free cash flow,” albeit its “leverage to stronger oil and gas prices isn’t as great as many of its peers”.
The sector is under growing pressure to invest more in renewable energy and cut carbon emissions.
BP announced plans last year for a 10-fold increase in low carbon investment by 2030 and a 40pc fall in its own oil and gas production by 2030.
Shell plans to cut the net carbon footprint of its products by 20pc by 2030 and by 100pc by 2050.
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