Shell Plc LON:SHEL shares are up after a rebound in second-quarter cash flow helped balance out weakness from its Qatar business.
- London traded normally. LSE trades from 0800 to 1630 BST. The next England and Wales bank holiday is Aug. 31.
- Shell Plc LON:SHEL traded at about 3,003p to 3,004p, up 3.14%. High print on the day was 3,008p, according to AJ Bell.
- The Q2 cash outlook points to a $12.2 billion-$17.2 billion change in working capital from Q1, offering stronger short-term support than the small bump to gas output.
- Shell boosted its Q2 outlook for integrated gas and LNG volumes, but gas output at the midpoint is still running about 31% under Q1, mainly because of the drop in Qatari volumes.
Shell Plc LON:SHEL climbed over 3% in London Tuesday after a second-quarter update showed a bounce in cash flow, which some in the market see as more important than the upgrade to gas production. Reuters said the shares were up 3.2% at 0825 GMT, while the European energy sector added 0.3%.
Shell said working capital will swing to a $1 billion-$6 billion inflow in Q2, after a $11.2 billion outflow in Q1. That puts the sequential change between $12.2 billion and $17.2 billion. These numbers land ahead of July 30 results, offering investors a clearer line from raw material price swings to cash flow.
Shell’s latest operating forecast suggests it is still coming up short on Q1 gas volumes, though the gap is smaller than it warned in May. Midpoint numbers here use the new range from the company.
| Q2 operating forecast | Q1 2026 actual | Earlier Q2 guide | Updated Q2 guide | Midpoint change vs earlier guide | Midpoint vs Q1 |
|---|---|---|---|---|---|
| Integrated Gas output | 909 kboe/d | 580-640 kboe/d | 610-650 kboe/d | +3.3% | -30.7% |
| LNG output | 7.9 MT | 6.8-7.4 MT | 7.4-7.8 MT | +7.0% | -3.8% |
| Upstream output | 1,843 kboe/d | 1,620-1,820 kboe/d | 1,750-1,850 kboe/d | +4.7% | -2.3% |
| Marketing volumes | 2,627 kb/d | 2,500-2,700 kb/d | 2,550-2,650 kb/d | 0.0% | -1.0% |
The trading update also drove the move in Shell shares. Shell said Integrated Gas trading and optimisation should come in higher than Q1. For Chemicals and Products, trading performance is expected to be similar to Q1. According to Reuters, Citi boosted its Q2 earnings-per-share outlook for Shell by 13% after the announcement.
The cash and margin outlook offers a clearer picture for Q2 than just looking at production data.
| Q2 cash and margin forecast | Q1 2026 actual | Q2 guide | Implied change |
|---|---|---|---|
| Working capital | -$11.2 bln | +$1 bln to +$6 bln | Improvement of $12.2 bln to $17.2 bln |
| Derivatives | -$0.4 bln | -$1 bln to +$4 bln | High variability |
| Cash tax paid | $2.3 bln | $2.6 bln-$3.4 bln | Cash tax to increase |
| Refining margin | $17/bbl | about $20/bbl | Up 17.6% |
| Chemicals margin | $139/tonne | about $240/tonne | Up 72.7% |
The Qatar drag is still there. Reuters said Shell’s Pearl gas-to-liquids plant in Qatar stopped production in March after an attack at Ras Laffan Industrial City hit one of its two trains. Repairs may take up to a year. Shell gets about 20% of its oil and gas output, or 550,000 boe/d, from the Middle East, with about 10% tied to Qatar.
Stronger prices boosted trading. Brent averaged $97 a barrel in Q2, up from $78 in Q1 and $67 a year ago. The Dutch TTF front-month gas contract averaged around 46 euros per megawatt hour, up from 40 euros in Q1, according to Reuters.
Shell has agreed to sell its South African downstream unit to ADNOC Distribution (ADX:ADNOCDIST), valuing the business at about $1 billion including debt. The sale covers 580 fuel stations, plus wholesale, aviation and lubricants activities. ADNOC Distribution CEO Bader Saeed Al Lamki said the group is “still hungry for growth” and sees value in keeping the Shell name. London South East
Shell’s cash line is a factor in capital returns. The company has paused its $3 billion buyback through July 14, citing securities law rules ahead of the pending ARC Resources (TSE:ARX) deal vote. Shell said any missed shares would be added to 2026 buybacks if the board signs off.
Shell said it will release its consensus, managed by Vara Research, on July 22. The company reports Q2 numbers on July 30.
