This is an update to the fourth quarter 2020 outlook provided in the third quarter results announcement on October 29, 2020. The impacts presented here may vary from the actual results and are subject to finalisation of the fourth quarter 2020 results.
This update note is presented based on prevailing commodity prices and forward curves, further movements and volatility till the end of the year are likely to impact earnings and CFFO.
Unless otherwise indicated, presented impacts relate to Adjusted Earnings on a post-tax basis.
INTEGRATED GAS
•Production is expected to be between 900 and 940 thousand barrels of oil equivalent per day. Despite increased production compared with the third quarter 2020, earnings impact is limited due to PSC effects.
•LNG liquefaction volumes are expected to be between 8.0 and 8.6 million tonnes.
•Trading and optimisation results are expected to be below average.
•Approximately 80% of our term sales of LNG in 2020 have been oil price linked with a price-lag of up to 6 months.
•Significant margining outflows have impacted CFFO in the fourth quarter so far, compared with margining related inflows at the end of the third quarter 2020. The full quarter impact is subject to movements in commodity prices and forward curves up until the last day of the quarter.
UPSTREAM
•Adjusted Earnings are expected to show a loss in the current price environment.
•Production is expected to be between 2,275 and 2,350 thousand barrels of oil equivalent per day, reflecting hurricane impacts in the US Gulf of Mexico (between 60 and 70 thousand barrels of oil equivalent per day) and the effect of mild weather in Northern Europe in the first half of the fourth quarter.
•Realised Upstream gas prices are expected to trend in line with Henry Hub.
•Depreciation is expected to be $100 to $200 million higher compared with the third quarter 2020.
•Tax charge in the range of $600 million and $900 million is expected to negatively impact Adjusted Earnings in the fourth quarter. This includes unfavourable movements in deferred tax positions.
•Despite the expected earnings loss, CFFO is not expected to reflect a comparable cash tax effect due to the build-up of deferred tax positions in a number of countries.
•CFFO is expected to be negatively impacted by the settlement of previously booked provisions in the range of $400 to $500 million.
OIL PRODUCTS
•Refinery utilisation is expected to be between 72% and 76%.
•Realised gross refining margins are expected to be slightly improved compared with the third quarter 2020.
•Sales volumes are expected to be between 4,000 and 5,000 thousand barrels per day.
•Marketing results are expected to be in line with the fourth quarter 2019 while significantly lower compared with the record third quarter 2020 due to lower volumes driven by seasonal trends.
•Trading and optimisation results are expected to be significantly lower compared with the third quarter 2020.
•Significant derivatives related outflows have impacted CFFO in the fourth quarter so far, compared with derivatives related inflows at the end of the third quarter 2020. The full quarter impact is subject to movements in commodity prices and forward curves up until the last day of the quarter.
•Working capital movements are typically impacted by movements between the quarter opening and closing price of crude along with changes in inventory volume.
https://www.investegate.co.uk/royal-dut ... 0000H6970/
Shell RDSB are a mainstay in my HYP, and I've topped up my holdings 4 times this year. On reading the above, RDSB shares might be on sale today. I'm at my maximum spend on them, and am not keen to over expose myself to the share. Or any other for that matter.
Ian.
