Shell plc (NYSE:SHEL) shares are trading lower in premarket after the company said it expects fourth-quarter results in its Integrated Gas division to be significantly lower sequentially, driven by the impact of expiring hedging contracts.

The oil giant lowered its guidance for integrated gas production for the quarter, expecting to produce between 880 – 920 kboe/d oil-equivalent barrels per day, down from the prior outlook of 900 – 960 boe/d.

This marks a drop from 941 kboe/d barrels in the prior quarter. The revision comes following scheduled maintenance at a facility in Qatar.

The company also adjusted its LNG production forecast, now predicting between 6.8 million and 7.2 million metric tons from a previous guidance of 6.9 million – 7.5 million metric tons.

This compares with the 7.5 million metric tons it produced in the previous quarter.

Shell also expects a $1.5 billion to $3 billion of non-cash, post-tax impairments and a $1.3 billion cash outflow linked to emissions-permit payments. The cash flow impacts stem from permit costs in both Germany and the U.S.

In October 2024, Shell reported third-quarter revenue of $71.09 billion, beating the consensus estimate of $61.34 billion. The company is slated to release its fourth-quarter earnings on January 30.

Yesterday, Morgan Stanley analyst Martijn Rats upgraded Shell shares from Equal-Weight to Overweight and raised the price target from $66.50 to $79.80.

Rats said that Shell's financial strength, combined with a favorable valuation, makes it well-positioned to weather ongoing challenges in the energy sector while delivering sustainable returns.

In December, Equinor ASA and Shell's subsidiaries Equinor UK Ltd and Shell UK Ltd announced the plan to merge their U.K. offshore oil and gas assets to form the U.K. North Sea's largest independent producer.

Price Action: SHEL shares are trading lower by 3% at $63.95 in premarket at the last check Wednesday.