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Energy giant’s shares slump after it warns of profits hit from gas trading

Mark Banham @Banham72

OIL and gas “supermajor” Shell today warned investors its previously booming profits will slip in the third quarter due to a hike in refining costs and the downturn in the gas trading market.

Shares in the energy giant dropped nearly 4% in early trading after the announcement. It said that its liquefied natural gas (LNG) trading in the period would be “significantly lower compared to the second quarter” as a result of “seasonality and substantial differences between paper and physical realisation in a volatile and dislocated market”.

The business has been under fire for raking in huge profits during a cost of living crisis that at one point could have seen some households pay up to £7000 for their annual energy bills.

Just yesterday outgoing Shell boss Ben van Beurden called for a business tax to help the poorest consumers meet energy costs.

This is the first chink in its financial armour that Shell has shown for some months, as in July the business reported record profits of $11.5 billion (£9.4 billion) for the second quarter, more than double last year’s figure of $5.5 billion (£4.5 billion). The firm said that cash flow from operations (CFFO) was hurt by working capital outflows of an estimated $2.5 billion (£2.2 billion).

Shell said that the adjusted earnings and CFFO price and margin sensitivities were “indicative” and could be “subject to change”.

“Sensitivity accuracy is subject to trading and optimisation performance, including short-term opportunities, depending on market conditions”, the company said.

It added that “volatility” could lead to a boost in cash flow during September.

Shell’s liquefied gas volumes are expected to be between 6.9 and 7.5 million tonnes.

Production is expected to be between 890,000 and 940,000 barrels of oil equivalent per day.

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2022-10-06T07:00:00.0000000Z

2022-10-06T07:00:00.0000000Z

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