General view of a Shell petrol station sign in Milton Keynes, Britain January 5, 2022. Portal/Andrew Boyers/File Photo GLOBAL BUSINESS WEEK AHEAD
- Shell announced a $6 billion buyback program
- Refining margins triple in second quarter
- Strong gas and electricity trading increases profits
LONDON, July 28 (Portal) – Shell (SHEL.L) on Thursday reported profit of $11.5 billion for the second quarter, beating its previous record just three months earlier, set by a tripling in refining profits and a strong gas trade was increased.
The company also announced a $6 billion share repurchase program for the current quarter, but didn’t increase its dividend of 25 cents per share. Shareholder returns would be “more than 30% of cash flow from operations.”
A quick rebound in demand after the end of the pandemic lockdowns and a surge in energy prices prompted by Russia’s invasion of Ukraine have boosted profits at energy companies after a two-year slump. Continue reading
Shell repurchased $8.5 billion worth of shares in the first half of 2022, and the new buyback program is significantly larger than forecast.
“The strong oil price backdrop has helped Shell deliver a series of blockbuster results. The dividend may have stayed the same, but the share buyback program is positive news for shareholders,” said Stuart Lamont, investment manager at Brewin Dolphin.
Shell shares rose 0.9% at the open in London.
French rival TotalEnergies (TTEF.PA) also reported record quarterly profits of $9.8 billion on Thursday, accelerating its buyback program. Continue reading
Norway’s Equinor (EQNR.OL) increased its special dividend and increased share buybacks on Wednesday. Continue reading
The US competitors Exxon Mobil and Chevron present results on Friday.
Oil and gas prices remained elevated during the quarter, with benchmark Brent crude averaging about $114 a barrel. Benchmark European natural gas prices and global liquefied natural gas (LNG) prices averaged all-time highs during the quarter.
REFINING BOOST
Shell’s adjusted earnings rose to $11.47 billion in the second quarter, ahead of the $11 billion forecast by analysts in a survey provided by the company.
That was an increase from $5.5 billion last year and $9.1 billion in the first quarter of 2022.
Shell’s strong results reflected higher energy prices and refining margins and strong gas and power trading, the company said, but were partially offset by lower LNG trading results.
Refining profit margins tripled to $28 a barrel in the quarter. They have weakened significantly in recent weeks amid signs of slowing gasoline demand in the United States and Asia.
Shell said refinery utilization will rise to 90-98% in the third quarter, compared to 84% in the second quarter.
Oil and gas production fell 2% sequentially to 2.9 million barrels of oil equivalent per day (boepd) in the second quarter.
Shell’s LNG liquefaction volumes were 7.66 million tonnes in the second quarter, up from 8 million in the previous quarter. Third-quarter volumes are expected to fall to 6.9-7.5 million due to strikes at Prelude’s Australian facility and planned maintenance.
Shell used the surge in cash generation to further reduce its debt, which totaled $46.4 billion at the end of June, compared to $48.5 billion three months earlier. The ratio of debt to capital or gearing fell to 19.3%.
Reporting by Ron Bousso and Shadia Nasralla Editing by Jason Neely and Mark Potter
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