Shell flags strong start to 2024 as oil and gas volumes stabilize

Shell on May 2 forecast potentially higher year-on-year oil and gas production in its Upstream unit in the second quarter of 2024, but lower production from its LNG-focused Integrated Gas unit, as it reported a second consecutive quarter of stable year-on-year production.

In a results statement, Shell forecast Upstream oil and gas production would be in the range of 1.63 million-1.83 million b/d of oil equivalent in the second quarter, compared with 1.70 million boe/d in Q2 2023.

In the Integrated Gas unit, it forecast Q2 2024 production in the range of 920,000-980,000 boe/d, down from 985,000 boe/d in Q2 2023.

In the first quarter, Shell's overall production was virtually unchanged year-on-year at 2.91 million boe/d, in line with an earlier forecast by the UK major and raising the prospect of a production decline in recent years potentially bottoming out.

The stable first quarter volumes were underpinned by rising gas production -- up 2% year-on-year at 8.09 Bcf/d -- while oil production across the Upstream and Integrated Gas units was down 1% on the year at 1.47 million b/d.

However, oil production was supported by the February startup of a new tie-in project at the Appomattox oil hub in the US Gulf of Mexico. The Rydberg tie-in is expected to produce 16,000 b/d at peak.

Shell highlighted maintenance as a factor in its forecast for production and LNG liquefaction in Q2, although it noted that it had been benefiting from lower maintenance activity at the previously glitch-prone Prelude Floating LNG facility offshore Australia.

"2024 is off to a good start," Chief Financial Officer Sinead Gorman said in a statement. "We delivered yet another set of strong operational and financial results in the first quarter. In Upstream, our conventional oil and gas business performed very well, with many of our core assets delivering high controllable availability."

The Platts Dated Brent North Sea benchmark averaged $83.16 in Q1 2024, up from $81.17 a year earlier, showed S&P Global Commodity Insights data.

Downstream, Shell noted its refinery utilization was 91% in the first quarter, up from 81% in the fourth quarter of 2023 due to lower planned maintenance in North America. Refinery processing intake was up 1% year on year at 1.43 million b/d.

The company's indicative refining margin was up quarter on quarter, rising from $10.18/b in Q4 2023 to $12.24/b, but down from the year-earlier level of $15.01/b.