Shell shares rise on Q2 Beat, strong cash flow

Investing.com – Shares of Shell PLC (BS:SHELl) rose on Thursday following its second-quarter results, beating expectations and strong performance across various metrics. 

The company's net income was at  $6.3 billion, surpassing both the consensus estimate of $5.9 billion and RBC Capital Markets' estimate of $6.0 billion. 

Operating cash flow, excluding working capital, totaled $13.1 billion, aligning with RBC Capital Markets' forecast and exceeding the consensus estimate of $12.4 billion. 

This was achieved despite a $700 million margin benefit that was excluded from these figures.

“The key driver of the beat was the upstream, with stronger than expected results in marketing also,” the analysts said. 

“The marketing result in particular is surprising given the guidance for flat qoq earnings alongside the trading update,” they added. 

Capital expenditures (capex) were reported at $4.7 billion, below RBC's estimate of $5.7 billion. Net debt, excluding leases, stood at $11.7 billion, outperforming RBC Capital Markets' estimate of $12.4 billion.

Shell anticipates liquefaction volumes to range between 6.8 and 7.4 million tonnes, slightly below the market consensus of 7.1 million tonnes. 

On the refining front, Shell expects utilization rates to fall within 83% to 91%, while the chemicals segment is projected to operate at 73% to 81% capacity. 

Regarding upstream production, Shell forecasts a range of 1,580 to 1,780 thousand barrels of oil equivalent per day, which is lower than both RBC's estimate of 1,894 thousand barrels and the broader market consensus of 1,777 thousand barrels.

In addition, Shell announced its $3.5 billion buyback program and maintained capital expenditure guidance. With net debt well below peer levels and strong cash generation, shareholders will be the focus of the conference call, RBC said.