Shell Reveals Ida Impact on Operations
In an update to its third quarter (3Q) 2021 outlook, Royal Dutch Shell plc (NYSE: RDS.A) warned that Hurricane Ida in the U.S. Gulf of Mexico is expected to have an aggregate adverse impact of around $400 million on adjusted earnings and cash flow (CFFO) from operations in 3Q.
Shell’s upstream adjusted earnings are expected to have been impacted by between $200 million and $300 million as a result of Ida, according to Shell, which highlighted that production is expected to be between 2.02 million and 2.1 million barrels of oil equivalent per day during 3Q. This includes impacts from Hurricane Ida, which Shell outlined were about 90,000 barrels of oil equivalent per day.
Adjusted earnings in Shell’s oil products segment are also expected to have been impacted by Ida, to the tune of between $50 million and $100 million. Refinery utilization is expected to be between 70 percent and 74 percent, which is lower compared to 2Q, due to Ida impacts. Total sales volumes are expected to be between 4.3 million and 5.3 million barrels per day.
Shell’s chemicals segment was also affected and adjusted earnings in this sector are expected to have been adversely impacted by around $100 million as a result of Ida. Chemicals manufacturing plant utilization is expected to be between 74 percent and 78 percent due to the hurricane, which is lower compared to 2Q.
In its update, Shell highlighted that impacts presented may vary from the actual results and are subject to finalization of the 3Q 2021 results, which are scheduled to be published on October 28.
The Bureau of Safety and Environmental Enforcement (BSEE) first activated its hurricane response team for Ida on August 27. At its peak, Ida shut in 95.65 percent of Gulf of Mexico oil production on August 29 and 94.47 percent of Gulf of Mexico gas production on August 31, BSEE figures show.
At the time of writing, there is only one weather pattern being tracked by the National Hurricane Center over the Atlantic. This disturbance had a 10 percent chance of cyclone formation within 48 hours, as of October 7, 8am EDT.
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