British oil giant, Shell (NYSE: SHEL) warned investors that its profits from trading gas will be significantly lower in the second quarter due to “due to seasonality and fewer optimization opportunities.” The company also warned that oil and gas production is likely to be down in the range of 1,650 to 1,750 thousand barrels of oil equivalent per day (kboepd) in the second quarter as compared to 1,877 kboepd in Q1.
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The fall in oil and gas production in the first three months of the year will be due to the maintenance of its assets located in the Gulf of Mexico, Norway, Malaysia, and Brazil. Shell’s chemicals business is expected to post a loss in Q2.
The drop in Shell’s profits comes even as the company’s CEO, Wael Sawan sounded off an alarm over the reduction in oil and gas supply, calling it “irresponsible.” Even Exxon Mobil (NYSE:XOM) had warned earlier this week that its Q2 profits are likely to take a hit following weakness in natural gas prices and lower refined earnings.
Companies like SHEL and XOM had seen higher profits last year as these oil giants benefitted from higher energy prices due to the war between Russia and Ukraine. However, this year, the slower-than-anticipated recovery in China has impacted oil and gas demand as China is one of the largest importers of oil.
Analysts are bullish about SHEL stock with a Strong Buy consensus rating based on nine Buys and one Hold.
