Investing.com -- Shares of Shell (BS:SHELl) traded lower on Wednesday following the company’s revision of its LNG production forecast.
The energy giant revised its fourth-quarter liquefaction guidance to 6.8-7.2 million tonnes (mt), a slight reduction from the earlier estimate of 6.9-7.5 mt.
Analysts at RBC Capital Markets described the update as a "weak trading update," flagging broad underperformance across several divisions, including oil, gas, and power.
The lowered LNG outlook reflects ongoing challenges within Shell’s Integrated Gas division.
RBC analysts pointed to weaker gas trading in the quarter, exacerbated by the expiration of certain hedging contracts, as a major factor contributing to the downgrade.
The company also reported lower feedgas availability and fewer cargo liftings as reasons for the revised forecast. This comes amid a broader decline in operational performance across Shell’s portfolio.
Chemicals margins dropped to $138 per tonne from $164 in the previous quarter, while oil trading saw a marked decrease in profitability, attributed partly to seasonal factors.
The company also flagged a potential $4-6 billion increase in lease liabilities, driven by its LNG Canada and Pavilion LNG projects.
Despite these setbacks, RBC analysts maintain an "outperform" rating on Shell’s stock, suggesting that the company’s long-term outlook and shareholder return policy remain intact.