Thursday preview: Shell, Lloyds

We have had results from BP this week so an update from Royal Dutch Shell must be imminent, and, sure enough, a third quarter statement is scheduled for Thursday morning.

Traditionally, the third quarter is used by Shell to assess the value its assets and take any asset impairment charges, notes Tony Shepard at Charles Stanley.

"Third quarter results could include a number of identified items relating to US shale assets, bid costs for Cove Energy and there could be a $300m net charge for abandonment costs. Some of Shell's peer group such as BP and BG Group have already made charges for US shale gas assets. For example, in Q2 [second quarter[, BP took a $2.1bn charge for its US shale gas assets," Shepard notes.

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The broker has pencilled in a figure of $5bn for net income, with downstream activities showing a strong improvement as a result of firmer refining margins, as was the case earlier this week with BP.

"There could be some impact from Hurricane Isaac on Gulf refineries and in general global refining and chemical availability is likely to be below last year's levels due to higher planned maintenance activity but we still anticipate Q3 Downstream earnings of about $1.5bn compared with $1.3bn in Q2," Shepard revealed.

The British tax-payer will be taking a keen interest in the results of Lloyds, given that the government owns a substantial chunk of the bank.

Underlying pre-tax profit of £580m in the third quarter is expected and a "management" pre-tax profit of £933m (which includes around £350m of 'fair value unwind') is on the cards, according to Credit Suisse.

In a research report on October 23rd, the broker said that it had not included any further provisions in its forecasts for Payment Protection Insurance (PPI) claims. "Having taken a total of £4.3bn PPI charge so far, the implied charge following Barclays announcement could be up to c£1.5bn."

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