A mixed update from Royal Dutch Shell (RDSB), effectively a teaser for third quarter numbers on 28 October, saw the shares dip 0.7% to £16.41.

The company expects a cash boost from the recent surge in gas and electricity prices but also flagged an impact from Hurricane Ida on its US operations.

The aggregate adverse impact is expected to be around $400 million on adjusted earnings for the period.

Quarterly production was also down to between 2.025 and 2.1 million barrels of oil equivalent per day (boepd) thanks to a 90,000 boepd linked to Ida.

The positive impact on cash generation at the firm’s Integrated Gas business has not yet been quantified.

‘WALL OF CASH’

AJ Bell investment director Russ Mould commented: ‘Royal Dutch Shell has given shareholders a trailer of its third quarter results that will likely whet appetites for the main event later this month.

‘Basically a wall of cash looks set to come the company’s way thanks to the recent surge in energy prices.

‘Like other large energy companies, Shell has pursued a more streamlined approach, slashing costs and spending, and selling non-core assets in recent years as it looks to put its finances on a sustainable footing.

‘This means when prices rise a lot of the increase drops through to profit and cash flow.’

Mould notes the company has benefited from its increased focus on natural gas in the last 10 years, supported by the £36 billion acquisition of BG Group in 2016 which helped made it a market leader in liquefied natural gas.

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Issue Date: 07 Oct 2021