Shell warns of a $2.0 billion tax hit in the current quarter

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on Jan 6, 2023
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  • Shell expects $550 million to $750 million loss in its fourth quarter.
  • GERDES Energy Research initiates Shell stock with a "buy" rating.
  • Shares of the oil giant are up 20% versus its low in late September.

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Shell plc (LON: SHEL) is in focus on Friday after it said the new levies in European Union and the United Kingdom could result in a $2.0 billion tax hit in its fourth quarter.

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Shell to report Q4 results in early February

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In September, EU said the fossil fuel companies will pay an additional tax on surplus profits in 2022 and 2023.

Weeks later, the U.K. also imposed a 35% levy on their windfall profits through March, 2028. The government expects this tax to bring in over $40 billion over the said period.

Energy companies noted a sharp increase in revenues last year as the West moved to shun Russian supply in response to its atrocities in Ukraine.

In the third quarter, Shell reported a more than 100% increase in its adjusted earnings to $9.45 billion that saw it raise its per-share dividend by about 15% for Q4. Versus its low in late September, Shell stock is up over 20% at writing.

What to expect from Shell’s fourth quarter

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Shell is scheduled to report its fourth-quarter results on February 2nd. Citing the new taxes, it guided for $550 million to $750 million in loss this morning.

According to the London-headquartered firm, its LNG volumes likely slipped to between 6.6 million and 7.0 million metric tons in the current quarter as two of its Australian facilities faced longer-than-expected outages.

Nonetheless, it expects a meaningful sequential growth in its fourth-quarter LNG trading results. Oil products trading, though, will likely be significantly lower than the previous quarter, Shell added.

Earlier this week, GERDES Energy Research initiated the Shell stock with a “buy” rating and said it had upside to $74. That represents a 30% premium on its current price.

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