Shell Plc. accelerated share buybacks after reporting a record profit of $11.5 billion due to high oil and gas prices.
Shell Plc. on Thursday reported a record jump in its profits in the second quarter and announced a share buyback of $6 billion along with a hefty dividend to shareholders.
The British multinational company is first of the oil and gas majors to report its half-year earnings, with BP, Chevron and ExxonMobil also expected to announce profits in the coming days.
Shell generated a record adjusted earnings of $11.47 billion in April–June, up from the previous high of $9.13 billion in the first quarter. Shell’s earnings was above the market consensus of $10.99 billion, based on analysts’ estimates to Vara.
The oil major’s net income was $18.04 billion, compared with $7.12 billion in the first quarter, as it booked impairment reversals of $4.3 billion related to forward commodity price assumptions.
Shell’s profit reflects higher realized prices, refining margins and trading profits for gas and power – which were offset by weaker liquefied natural gas trading.
Shell shares were up 1 percent in early trading on Thursday.
Oil Supermajors See Record Profits
France’s TotalEnergies, which also reported earnings on Thursday, said it’s Q2 profits nearly tripled to $9.8 billion during the same period last year. During the energy crisis in the UK, Centrica, which owns British Gas, reported a fivefold increase in its operating profits.
The second-quarter profits of France’s TotalEnergies, which also released data on Thursday, nearly tripled to $9.8 billion from the same period last year. During the energy crisis, Centrica, the owner of British Gas in the UK, reported a fivefold increase in operating profits. Ben van Beurden, the chief executive of Shell, criticized the UK government’s introduction of the energy earnings levy and rejected proposals for yet another round of tax rises, urging instead for more investment.
“With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike,” Chief Executive Officer Ben van Beurden said in a statement on Thursday.
The development of the UK’s Jackdaw gasfield received Shell’s approval on Monday. Although, it did not change its global investment projections, and capital expenditure for 2022 is still expected to be between $23 and $27 billion. Shell profits rose to higher prices for crude in April, May and June despite producing less oil than in the first quarter as a result of Russia-Ukraine conflict. Performance in its chemicals and products sector was driven by higher refining margins, and it also reported “exceptionally robust” profitability from its gas and power trading division.
Shell kept its dividend at $0.25 per share but stated that total payouts to shareholders under the $6 billion buyback program will be in excess of 30% of cash flow from operations. Following $8.5 billion in buybacks that were finished in the first half of the year, there will be another round of share purchases. The dividend is still much below its $0.47 per share pre-pandemic level. As lockdowns hurt demand and drove oil prices below $20 per barrel in 2020, Shell lowered the payout by two-thirds to $0.16, the first decrease since the Second World War.
