Shell PLC’s Q1 2025 Production Outlook: A Detailed Analysis
Shell PLC (hereafter referred to as Shell), the Anglo-Dutch multinational oil and gas company, has recently disclosed its preliminary expectations for production levels in the first quarter of 2025. The company anticipates a slight increase in natural gas production but a potential decrease in oil production compared to the last three quarters of 2024.
Divisional Production Expectations
Shell’s Upstream Director, Marjan van Loon, reported that the Upstream division is projected to deliver around 2.6 million barrels of oil equivalent per day (boe/d) in Q1 2025. This is a slight increase from the 2.5 million boe/d produced in the same period in 2024. The Upstream division primarily focuses on the exploration, production, and sale of crude oil, natural gas, and natural gas liquids.
The Downstream division, which encompasses refining, marketing, and the sale of petroleum products, is expected to process around 5.3 million barrels of crude oil per day in Q1 2025. This represents a slight decrease from the 5.4 million barrels processed in Q4 2024.
Impact on Shell’s Financial Performance
Shell’s Q1 2025 production outlook is accompanied by preliminary information on the division-specific depreciation and operating expenditures (opex). The Upstream division is projected to incur depreciation and amortization costs of approximately $3.2 billion, while opex is estimated at around $5.3 billion. The Downstream division is expected to incur depreciation and amortization costs of around $1.2 billion, with opex projected at $2.6 billion.
Market Implications
The anticipated decrease in oil production from Shell could contribute to a potential increase in oil prices, as the global oil market is currently experiencing supply constraints due to OPEC+ production cuts and geopolitical tensions. This could lead to higher fuel costs for consumers and increased revenues for oil-producing nations.
Moreover, natural gas prices have been on an upward trend due to increased demand and lower inventories. Shell’s expectation of a slight increase in natural gas production could help alleviate some of the supply concerns, potentially leading to a decrease in natural gas prices. However, this could also depend on the overall production levels from other major gas producers.
Conclusion
Shell’s Q1 2025 production outlook, which includes slightly higher natural gas production but potentially lower oil production, offers insight into the company’s operational performance and financial expectations for the upcoming quarter. The potential impact on oil and natural gas prices could have far-reaching implications for consumers, producers, and the global economy as a whole.
- Shell anticipates slightly higher natural gas production but potentially lower oil production in Q1 2025
- Preliminary financial data shows Upstream division to incur higher depreciation and opex, while Downstream division to incur lower depreciation and similar opex
- Impact on oil and natural gas prices could depend on overall production levels from major producers
