Resulting from rising oil and gas prices, Shell claims record earnings

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Last Updated on July 30, 2022 by Bitfinsider

As the effects of the crisis in Ukraine continue to provide record profits for the world’s oil and gas companies, Shell has announced a $6 billion share buyback program and shattered its quarterly profit record for the second time in a row.

In the first half of the year, disruptions to global commodity flows caused by the Russian invasion have coincided with rising consumer demand, driving prices for oil, gas, and refined petroleum products to record highs.

The first of the so-called “supermajors,” Shell, has released its half-year results. ExxonMobil, Chevron, and BP are also anticipated to make positive announcements in the coming days.

Several nations, including the UK, have increased taxes on energy corporations this year, but requests for extra charges may arise if another wave of record profits occurs.

The largest oil firm in Europe, with headquarters in the UK, announced second-quarter adjusted earnings of $11.5 billion, above the first-quarter record of $9.1 billion. That was higher than the $5.5 billion it brought in a year earlier and outperformed the $11 billion average expert projection.

The price of Shell stock increased by around 1% during London’s morning session.

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.

Van Beurden continued by saying that the officials who had pushed for lower oil and gas output in order to lower emissions were still not doing enough to reduce consumer demand.

The development of the UK’s Jackdaw gasfield received Shell’s approval on Monday. Even still, it did not change its worldwide investment projections, and capital expenditure for 2022 is still expected to be between $23 and $27 billion.

Despite producing less oil than in the first quarter, Shell saw their profits rise because to higher prices for crude in April, May, and June as a result of Russia’s invasion of Ukraine in February.

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 programme will be “far 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 coronavirus lockdowns hurt demand and drove oil prices below $20 a barrel in 2020, Shell lowered the payout by two-thirds to $0.16, the first decrease since the Second World War.

RBC Capital Markets analyst Biraj Borkhataria stated that the “far greater” buyback more than made up for the lack of a dividend increase, resulting in overall “higher payments than expected.”

In the first half of 2022, cash flow from operations, excluding changes in working capital, reached $23 billion, above analyst consensus projections of $19.2 billion. From $48.5 billion three months ago, net debt decreased to $46.4 billion.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.

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