Shell has trailed its second quarter results and the good news is there may be a little less ammunition for advocates of harsher windfall taxes. The bad news is this is because its results are likely to be somewhat less impressive than they have been in recent quarters.
AJ Bell’s Russ Mould said: “How much the drop in earnings from its natural gas trading operation is a function of what Shell describes as ‘seasonality’ in the market, and how much it is just cyclical weakness linked to a softening economy is an open question. Investors appear to be sitting on their hands rather than coming down on one side or another judging by this morning’s share price reaction.
“The company also expects the numbers to be marred by field maintenance which will limit production. Even considering a record first quarter of the year Shell has fallen behind its US peers and there is a danger a weak showing could undermine it further.
“Chief executive Wael Sawan, who began his tenure at the start of 2023, has a plan to boost Shell’s valuation and play catch-up with its American rivals by trimming operating costs and limiting spending to areas where he is confident big returns can be made.
“This hard-nosed approach has also meant abandoning planned oil production cuts which were previously a part of Shell’s energy transition strategy. This might be well received by shareholders but could lead to increased political and even regulatory pressure.
“Sawan has also signalled he is open to moving Shell’s listing to the US, something which would be yet another blow to the prestige of the UK market.”