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Shell’s Gas Trading Booms While Oil Trading Slows

Shell expects the trading results of its gas division to have been significantly higher in the fourth quarter of 2021 compared to the third quarter, on the back of high natural gas and LNG spot prices, the supermajor said in its fourth quarter 2021 update note on Friday.

At the same time, Shell expects its oil products trading and optimization results to be significantly lower than the third quarter of 2021. Adjusted earnings at the refining and trading division are expected to be negative despite higher indicative refining margins, an approximation of Shell’s global net realized refining margin, the company said.

Shell issued the update note ahead of the publishing of the Q4 2021 results scheduled for February 3, 2022.

In today’s note ahead of the earnings release, Shell said it would distribute the remaining $5.5 billion of proceeds from the sale of its Permian assets “in the form of share buybacks at pace.”

Shell announced in September its exit from the Permian with a divestment of its assets in the shale play to ConocoPhillips for a total price of $9.5 billion.

“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Upstream Director at Shell.

“The Permian related distributions are in addition to the distributions of 20-30% of cash flow from operations as per our existing capital allocation framework,” Shell said today.  

The decision for the Permian-related buybacks was taken on December 31, 2021, during the first Board meeting held in the UK following the decision to implement the simplification of the company’s share structure.

At the end of last year, Shell proposed to shareholders, and they overwhelmingly voted in favor of, a plan to drop the dual share structure and ‘Royal Dutch’ from the name, move its tax residence to the UK from the Netherlands, and make its share structure simpler for investors to value and understand.

By Tsvetana Paraskova for Oilprice.com

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