Wednesday 7 April 2021 9:58 am

Historic Texas freeze cost Shell £145m

Oil giant Shell has said that a storm that blanketed Texas in February, killing more than 100 people, will cost it around $200m (£145m) in adjusted earnings.

The London-listed company said it expects to produce between 2.4m and 2.48m barrels of oil or equivalents per day from its upstream business unit in the first three months of the year.

This is around 10,000 to 20,000 barrels lower as a result of the storm that caused widespread blackouts in Texas.

Despite the warning, shares in the firm rose 0.4 per cent as markets opened this morning.

The dire conditions in the Lone Star state, the US’ energy heartland, saw a huge drop in oil production, with many wells shut in due to the freezing conditions.

At one point, the Houston canal, a vital artery for oil and gas exports, was shut due to extreme weather.

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The Anglo-Dutch giant said its upstream division would take a $40m hit, and its oil products and chemicals businesses $80m and $60m respectively.

However, despite the hit from the once-in-a-century event, Shell said that the current strength of oil and gas prices would ensure earnings were positive in the first quarter.

Although they have slipped back in recent weeks, oil prices are now standing at pre-pandemic levels, propped up by Opec’s massive supply curb strategy.

Analysts at Jefferies labelled the update “disappointing”, coming as it does after BP yesterday said it would beat its debt reduction timeline by a year.

Jefferies added that Shell’s comments “around trading contribution and production volumes are likely to trigger some downgrades”.