Oil companies have had a pretty rough start to the year and analysts aren’t holding out too much hope for Royal Dutch Shell’s results on Thursday.
The FTSE 100-quoted firm has already warned that fourth-quarter earnings will be “significantly lower”. Earnings are expected to fall to $2.9bn (£1.8bn), from $5.6bn in the equivalent quarter the previous year, due to dwindling oil and gas prices and the challenging European refining market.
Then peer BG unveiled an across-the-board downgrade yesterday, slashing production forecasts and warning of a decline in earnings, causing its share price to fall almost 15 per cent in early trading.
“I think Shell is going to report $19.5bn for the year with lower volumes, higher costs and an impairment charge of $700m,” said oil and gas analyst Malcolm Graham-Wood.
“A bit like BG, the US gas market is the main culprit and French Guiana for the exploration expenses.”
Brenda Kelly, chief market strategist at IG, commented that chief executive Ben van Beurden “has already given us an idea not to expect too much,” so did not expect a huge share price movement on Thursday.
“I think the market will forgive them, as I expect they’ve already priced it in,” she added. “Shell is a trade for the patient investor.”