Shell share price steady as investors eye second-quarter results

Oil price weakness expected to have weighed on upstream earnings

Shell share price steady as investors eye second-quarter results

Shares in Royal Dutch Shell (LON:RDSA) have climbed marginally higher in today’s session, ahead of the company’s second-quarter results tomorrow. The oil major’s upstream earnings are expected to have dipped during the reported period due to the recent weakness in crude prices.

As of 10:26 BST, Shell’s share price had added 0.46 percent to 2,089.00p, largely in line with gains in the broader UK market, with the benchmark FTSE 100 index currently standing 0.57 percent higher at 7,476.94 points. The group’s shares have added more than one percent to their value over the past year, but have given up some six percent in the year-to-date.

Shell is scheduled to update investors on its second-quarter performance tomorrow and City A.M. reports that Panmure Gordon expects the company to report weaker quarter-on-quarter upstream earnings, due to the recent drop in crude prices below $50 a barrel, as well as seasonally weaker production. Reported earnings meanwhile are forecast to reflect a hefty charge for identified items, which the analysts see at $1.3 billion (£1 billion). The Anglo-Dutch oil major, however, is expected to have received cash disposal proceeds of around $7.5 billion, as it continues to slim down in the wake of BG Group’s acquisition.

“We forecast organic cash flow to comfortably cover cash dividend and capital expenditure, so the flood of cash from disposals should help drive a notable 2.6 percent quarter-on-quarter reduction in gearing, taking gearing below 25 percent for the first time since the acquisition of BG at the start of 2016,” Colin Smith, equity researcher at Panmure, commented, as quoted by City A.M.

In ratings news, Barclays reiterated its ‘overweight’ stance on Shell yesterday, valuing the shares at 2,750p. According to MarketBeat, the oil major currently has a consensus ‘buy’ rating and an average price target of 2,400p. 

As of 10:44 BST, Wednesday, 26 July, Royal Dutch Shell Plc 'A' share price is 2,089.50p.

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