Will Shell's Q3 Earnings Benefit From LNG and Trading Gains?

Shell plc (SHEL) is set to release third-quarter results on Oct. 30. The Zacks Consensus Estimate for earnings is $1.72 per share on revenues of $74.9 billion.

Let’s delve into the factors that might have influenced the integrated energy behemoth’s results for the September quarter. But it’s worth taking a look at SHEL’s previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last reported quarter, Europe’s largest oil company beat the consensus mark on the back of cost reductions and higher natural gas realizations. SHEL had reported earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $1.42, topping the Zacks Consensus Estimate of $1.13. However, revenues of $66.4 billion missed the Zacks Consensus Estimate by nearly 10% due to lower upstream production plus a decline in oil prices.

Shell beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 6.1%, on average. This is depicted in the graph below:

Shell PLC Unsponsored ADR Price and EPS Surprise

Shell PLC Unsponsored ADR price-eps-surprise | Shell PLC Unsponsored ADR Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the third-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 10.4% drop year over year. The Zacks Consensus Estimate for revenues, however, suggests a 3.3% increase from the year-ago period.

Factors to Consider

Earlier this month, Shell issued an updated outlook for the third quarter of 2025, offering an insight into how one of the world’s largest integrated energy companies is positioning itself across the key business segments.

Shell’s Integrated Gas production is forecasted to have been in the range of 910-950 thousand barrels of oil equivalent per day (kboe/d), slightly up from 913 kboe/d in the second quarter. More notably, LNG liquefaction volumes are projected to be in the band of 7-7.4 million tons (MT), up from 6.7 MT in the previous quarter. This reflects Shell’s continued leverage of its global LNG infrastructure and trading capabilities. The company also anticipates Trading & Optimization results to have been “significantly higher” than the second quarter, highlighting the segment’s role as a key earnings driver.

The Upstream division is expected to have shown a notable increase in production expectations, 1,790-1,890 kboe/d, up from 1,732 kboe/d in the second quarter. This indicates operational improvements and possibly fewer unplanned outages. However, the segment is not without its challenges. Shell expects adjusted earnings to have taken a $0.2-$0.4 billion hit due to the rebalancing of participation interests in Brazil’s Tupi field. Meanwhile, marketing sales volumes are projected to be in the range of 2,650-3,050 kb/d, down from 2,813 kb/d in the second quarter.

What Does Our Model Say?

The proven Zacks model does not conclusively predict an earnings beat for SHEL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Shell has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.72 per share each.

Zacks Rank: Shell currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for Shell, here are some firms from the energy space that you may want to consider on the basis of our model:

Transocean Ltd. (RIG) has an Earnings ESP of +31.58% and a Zacks Rank #3. The firm is scheduled to release earnings on Oct. 29.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2025 earnings of Transocean indicates 107.7% growth. Valued at around $3.7 billion, RIG has lost 3.2% in a year.

Imperial Oil Limited (IMO) has an Earnings ESP of +12.12% and a Zacks Rank #3. The firm is scheduled to release earnings on Oct. 31.

Imperial Oil beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average being 14.9%. Valued at more than $45 billion, IMO has gained 22.2% in a year.

Comstock Resources (CRK) has an Earnings ESP of +2.86% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov. 3.

The Zacks Consensus Estimate for 2025 earnings of Comstock Resources indicates 295.8% growth. Valued at more than $5 billion, CRK is up 49.7% in a year.

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This article originally published on Zacks Investment Research (zacks.com).

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