Shell, the biggest international oil company (IOC) in Nigeria in terms of output and assets, envisages 270,000 barrels of oil equivalent per day (boepd) output decrease and low earnings in the country in the first quarter of 2018.
The oil major, which, announced its 2018 outlook as a part of its fourth quarter 2017 results, kept its assessment of Nigeria’s security situation above the redline.
On its Q1 2018 outlook it said: “Compared with the first quarter of 2017, upstream earnings are expected to be negatively impacted by a reduction of some 270,000 boepd associated with completed divestments, and positively impacted by some 40,000 boepd associated with lower maintenance activities.
“Earnings are expected to be positively impacted by 40,000 boepd associated with restored production in Nigeria; however, the security situation remains sensitive.”
It stated that its total production in Nigeria increased to 170,000 barrels of oil equivalent per day in the fourth quarter of 2017.
Its liquids production available for sale in Nigeria stood at 53,000 bpd in the fourth quarter, while it’s natural gas production available for sale in Nigeria also increased to 677 million standard cubic feet per day in the fourth quarter.
Royal Dutch Shell (RDSa.L) could usurp its largest rival Exxon Mobil (XOM.N) as the energy sector’s biggest cash generator after higher oil and gas prices combined with an improved performance lifted its 2017 revenue.
Chief Executive Ben van Beurden has made no secret of his desire to challenge the dominance of the world’s largest listed oil company after its $54 billion purchase of BG Group in 2016 catapulted Shell into second place in terms of production.
The Anglo-Dutch company last Thursday reported a more than doubling of profit in 2017 to $16 billion, the highest since the start of the 2014 downturn as the effect of years of costs cuts and the integration of BG Group filtered through.
“We enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash,” van Beurden said in a statement.
Cash flow from operations in 2017 rose to $35.65 billion from $20.62 billion a year earlier, putting Shell on course to beat Exxon, which is forecast to have generated $32.6 billion in 2017, according to estimates by Jefferies analysts. Exxon reports earnings on Friday.
Shell’s shares were however, 1.5 percent lower at 1200 GMT, compared with a 0.16 decline in the FTSE 100 index, as its fourth quarter cash flow was lower than anticipated by analysts.
The cash growth was driven by a sharp recovery in oil prices in the second half of 2017, as the benchmark Brent price reached a three-year high of $70 a barrel.