Shell Books Record Profit As Commodity Prices Rally

Shell (NYSE: SHEL) reported on Thursday another record in quarterly earnings—its second record-setting quarter in a row–as oil and gas prices surged and refining margins spiked.

Shell booked adjusted earnings—the measure most closely watched by analysts—of $11.472 billion for the second quarter, up from the previous record earnings of $9.130 billion booked for the first quarter this year, and more than double the $5.534 billion in earnings for the second quarter of last year. The Q2 2022 earnings were also ahead of analyst expectations of $11 billion.

The higher earnings mainly reflected higher realized prices, higher refining margins, and higher gas and power trading and optimization results, Shell said.

Cash flow from operating activities jumped by 26% sequentially to $18.655 billion.

Following the record results, Shell announced a share buyback program of $6 billion, which is expected to be completed by the third-quarter 2022 results announcement. These share repurchases will add to the $8.5 billion buyback program for the first half of 2022, which was completed in early July.

“With the current energy sector outlook and subject to Board approval, shareholder distributions are expected to remain in excess of 30% of cash flow from operating activities,” Shell said.

Analysts had expected Europe’s biggest firms—Shell, BP, and TotalEnergies—to boost share repurchases, and some also anticipated that Shell could announce a further dividend increase on the back of another set of blockbuster results for the second quarter.

But Shell did not. The supermajor left its dividend unchanged at $0.25 per share for the second quarter.

“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. Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future,” Shell CEO Ben van Beurden said.