Shell Q2 Results to be Disappointing and Upstream Business Expected to Decline

Shell is expected to report disappointing Q2 results and early signs of upstream decline, leading the finance expert to sell their shares and allocate the proceeds to other oil-related investments. External fundamental factors, such as shifts in market conditions and company performance, are seen as significant contributors to this decline.

Shell plc (SHEL) is expected to report disappointing Q2 results, with early signs of upstream decline, prompting a finance expert to sell their shares and allocate the proceeds to other oil-related investments. External fundamental factors, such as shifts in market conditions and company performance, are seen as significant contributors to this decline.

Shell's retreat from chemical recycling, as announced in early 2024, has led to a significant strategic pivot. The company's decision to exit chemical operations entirely by 2030, following a comprehensive strategic review, highlights the challenges faced by the integrated energy sector. Shell's Q4 2024 results posted negative adjusted earnings of $258 million in the chemicals division, underscoring the financial strain of this strategic retreat [1].

The upstream sector of Shell, and the broader integrated energy industry, is navigating a highly uncertain and challenging macroeconomic environment. Volatile oil prices, decelerating oil production growth, and an accelerating shift towards renewable energy are creating a softened industry environment. The refining, renewable energy, and chemical segments are particularly under pressure due to limited visibility into future market dynamics [1].

Exxon Mobil, Chevron, and Shell are among the integrated energy companies expected to survive the current challenges. However, the Zacks Oil and Gas Integrated International industry carries a Zacks Industry Rank #189, placing it in the bottom 23% of the 245 Zacks industries. This rank indicates bleak near-term prospects for the industry [1].

Shell's upstream operations, particularly in regions like the United States, have been affected by reduced production growth. The slowdown in oil production growth is constraining earnings from upstream operations, which heavily depend on volume to generate income. This trend is expected to persist, with upstream operations facing further challenges due to the accelerating shift towards renewable energy [1].

In contrast, TotalEnergies is doubling down on chemical recycling with unprecedented investment levels. The French energy giant allocated €4.8 billion specifically to low-carbon energies in 2024 and maintains its commitment to producing 1 million tonnes of circular polymers annually by 2030. This strategy demonstrates TotalEnergies' belief that chemical recycling represents a core competency rather than a peripheral activity [2].

Investors should closely monitor Shell's Q2 results and the broader trends affecting the integrated energy sector. The company's strategic retreat from chemical recycling and the challenges faced in the upstream sector may signal a broader trend within the industry. The finance expert's decision to sell shares and allocate the proceeds to other oil-related investments reflects the current uncertainty and potential risks associated with Shell's operations.

References:
[1] https://www.ainvest.com/news/surviving-volatility-exxon-mobil-chevron-shell-industry-challenges-2507/
[2] https://www.netnewsledger.com/2025/07/28/shell-and-totalenergies-partnerships-signal-corporate-validation-of-yazan-al-homsis-recycling-investment-strategy/