Shell Sees Lower Production, Softer Trading In Q2

Shell plc (NYSE:SHEL) on Monday released its updated financial outlook for the second quarter of 2025, ahead of its scheduled July 31 earnings report. The guidance outlines expected performance across major business segments, including gas production, marketing, chemicals, and renewables.

Output from integrated gas operations is projected to be between 900,000 and 940,000 barrels of oil equivalent per day, compared to 927,000 barrels of oil equivalent per day in the first quarter. LNG liquefaction volumes are estimated to be between 6.4 and 6.8 million metric tons, versus 6.6 million metric tons in the first quarter.

Upstream production is set to decline to a range of 1.66 million to 1.76 million barrels per day, down from 1.855 million in the first quarter, following scheduled maintenance and the completed sale of assets in Nigeria.

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Shell anticipates stronger adjusted earnings in its marketing division compared to the first quarter, supported by projected sales volumes between 2.6 million and 3 million barrels per day. However, trading and optimization activity is expected to drop sharply across several segments, signaling a broader weakness in market conditions.

While Shell expects improved margins in its refining and chemicals businesses, $8.9 per barrel (from $6.2) for refining and $166 per metric ton (from $126) for chemicals, the company said adjusted earnings from the Chemicals and Products segment will likely fall below breakeven.

Refinery utilization is forecast at 92–96% (up from 85%), while chemicals utilization is set to fall to 68–72% (from 81%) due to maintenance at the Monaca facility. Operating expenses are expected to be between $1.7 billion and $2.1 billion.

Renewables and Energy Solutions could report an earnings loss of up to $400 million or a gain of up to $200 million. Shell attributes the wide range to continued weakness in trading activity. Meanwhile, its corporate unit is projected to post an adjusted loss between $400 million and $600 million.

At the group level, Shell expects to pay between $2.8 billion and $3.6 billion in taxes for the quarter. Derivative movements could swing from a $1 billion loss to a $3 billion gain. Working capital is expected to vary significantly, ranging from a $1 billion outflow to a $4 billion inflow, contributing to uncertainty around overall cash flow from operations.

Shell’s full earnings report for the second quarter is due July 31.

Related ETFs: Energy Select Sector SPDR Fund (NYSE:XLE), iShares Global Energy ETF (NYSE:IXC).

Price Action: SHEL shares are trading lower by 2.88% to $69.85 premarket at last check Monday.

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