Shell plc SHEL is set to release first-quarter results on May 2. The current Zacks Consensus Estimate for the to-be-reported quarter is earnings of $1.59 per share on revenues of $79.9 billion.

Let’s delve into the factors that might have influenced the integrated energy behemoth’s results in the March quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last reported quarter, Europe’s largest oil company missed the consensus mark, dragged down by weaker realized prices, drop in trading margins and lower LNG sales. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.20, well below the Zacks Consensus Estimate of $1.78. Revenues of $66.8 billion also came in 16.6% below the Zacks Consensus Estimate.

Shell beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 3.6%, on average. This is depicted in the graph below:

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 33.2% drop year over year. The Zacks Consensus Estimate for revenues, however, suggests a 7% decrease from the year-ago period.

Factors to Consider

Shell recently issued an updated outlook for the first quarter of 2025, signaling challenges in its liquefied natural gas (LNG) operations and broader production levels. The company revised its Q1 LNG production forecast to a range of 6.4-6.8 million metric tons, with the midpoint notably lower than its previous 6.6–7.2 million ton estimate. The Zacks Consensus Estimate stands at 6.81 million tons. The downgrade stems from severe cyclones and unplanned maintenance affecting its Australian operations, especially at the Prelude floating LNG facility.

While these weather-related disruptions have hindered output, Shell has noted that gas trading results are expected to remain stable versus the prior quarter. Still, the incident underscores the operational risks tied to natural events and technical setbacks. Shell also lowered its integrated gas production guidance to 930,000 barrels of oil equivalent per day (boe/d), compared to the earlier estimate of 960,000 boe/d. The Zacks Consensus Estimate pegs it at 931,000 boe/d. The decline is again linked to unplanned downtime in Australia, though management efforts have helped cushion the financial impact.

Further, Shell anticipates a $100 million exploration write-off in Q1, highlighting potential difficulties in new project development or asset viability. Exploration write-offs are not unusual, but they suggest that Shell may be adjusting its priorities or reevaluating underperforming ventures.

In its marketing division, Shell expects lower results from its specialty products business, which includes lower-carbon energy offerings for marine and aviation sectors. This indicates that while the company is actively investing in cleaner energy solutions, market conditions and early-stage transitions continue to present obstacles.

Shell also revised its upstream oil and gas production forecast for the quarter to between 1.79 and 1.89 million boe/d, slightly down from the previous range of 1.75 to 1.95 million boe/d. The Zacks Consensus Estimate for this segment sits at 1.84 million boe/d. Operational setbacks, including weather and maintenance, have made it difficult for Shell to consistently hit its output targets. However, the company continues to focus on cost control and operational efficiency across its upstream portfolio.

Despite the short-term production hurdles, Shell remains committed to its integrated energy strategy. The company’s resilience in managing through disruptions and its sustained investment in both traditional and renewable energy assets reflect a balanced approach to long-term growth. Still, with output lowered across key divisions and added pressure from write-downs and weaker specialty product margins, the first quarter is shaping up to be a mixed one for Shell.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Shell is likely to beat estimates in the first quarter of 2024. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Shell has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.59 per share each.

Zacks Rank: Shell currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

(See the Zacks Earnings Calendar to stay ahead of market-making news.)

Stocks to Consider

While an earnings beat looks uncertain for Shell, here are some firms from the energy space that you may want to consider on the basis of our model:

Coterra Energy CTRA has an Earnings ESP of +2.84% and a Zacks Rank #3. The firm is scheduled to release earnings on May 5.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, the Zacks Consensus Estimate for Coterra Energy’s 2025 earnings per share indicates 70.2% year-over-year growth. Valued at around $19.7 billion, Coterra Energy has lost 5.3% in a year.

ConocoPhillips COP has an Earnings ESP of +1.88% and a Zacks Rank #3. The firm is scheduled to release earnings on May 8.

ConocoPhillips beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, with the average being 2.1%. Valued at around $117.5 billion, ConocoPhillips has lost 26.1% in a year.

Helmerich & Payne HP has an Earnings ESP of +14.61% and a Zacks Rank #3. The firm is scheduled to release earnings on May 7.

Helmerich & Payne beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, with the average being 4.9%. Valued at around $2 billion, Helmerich & Payne is down 48.1% in a year.

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ConocoPhillips (COP) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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