Oil majors BP and Shell are expected to publish a “steady” set of third quarter results this week after limiting the impacts of Hurricane Harvey, an analyst has said.
Iain Armstrong of Brewin Dolphin also said higher crude prices coupled with the firms’ cost cutting measures should add up to positive, if unspectacular results.
Mr Armstrong said: “This is going to be another good quarter of progress for BP. They’re not going to shoot the lights out but they’re not going to disappoint either. Shell is probably in the same category.”
The two energy giants are releasing their latest financial updates in the week after Brent crude prices climbed above $60 for the first time in two years.
BP will release its Q3 financial update tomorrow, with Shell to follow on Thursday.
Mr Armstrong said Shell might have some “catching up” to do on its $30billion divestment target for 2016-18.
“We’ve not heard about many disposals this quarter,” he said. “They’ve said divestments worth $25billion have been completed, announced or are under way so they’re quite far down the road, but only $8billion has made it onto the balance sheet.”
Mr Armstrong said Shell’s breakaway from the Motiva refinery joint venture with Saudi Aramco meant the firm’s downstream performance should not be hit too hard by Harvey.
He also said early steps taken by Shell should mean that production from its Gulf of Mexico assets stays strong.
“Shell did a lot of pre-emptive work,” he said. “They shut down their platforms quickly, then got people back offshore quickly, so there should not be a lot of lost production.
“BP will probably be okay as well, because its Gulf Coast assets are further up coast from where the Hurricane hit.”
He said crude prices being higher year-on-year helped all players.
BP will be boosted because the company has started production from six major projects this year.
First gas from the giant Khazzan field in Oman was the most recent start-up, having been announced at the end of September.
Mr Armstrong said: “BP had a really good second quarter in upstream, so it will be difficult for them to improve sequentially, but year-on-year improvement should be easy.”
Mr Armstrong said Shell’s downstream performance would be helped by better refinery margins, but offset by a difficult year-on-year comparison.
Operations at the company’s Pernis refinery in the Netherlands were disrupted by a fire during the quarter, though the Pearl gas-to-liquids plant in Qatar was brought back online earlier this year.
He said the main positive for Shell could be its integrated gas business, as LNG demand has held up well.
Mr Armstrong also said investors would be watching with interest for any announcements on scrip dividends − dividend payments made in the form of additional shares rather than a cash payout − at BP and Shell.
He said: “The big thing people are looking out for is − when are they going to get rid of the scrip dividend? I don’t think it will be this quarter − it’s more likely to be in 2018.”