Shell breaks record again with $11.5 billion in profits

General view of a Shell petrol station sign in Milton Keynes, Britain January 5, 2022. REUTERS/Andrew Boyers/File Photo GLOBAL BUSINESS WEEK AHEAD

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  • Shell announces $6 billion buyout program
  • Refining margins triple in second quarter
  • Solid profits on gas and electricity trading

LONDON, July 28 (Reuters) – Shell (SHEL.L) reported second-quarter profit of $11.5 billion on Thursday, smashing its previous record just three months earlier, lifted by a tripling of profits from refining and strong gas exchange.

The company also announced a $6 billion share buyback program for the current quarter, but did not increase its dividend by 25 cents per share. He said shareholder returns would remain “above 30% of cash flow from operating activities”.

A rapid recovery in demand after the end of pandemic shutdowns and a spike in energy prices, driven by Russia’s invasion of Ukraine, boosted profits for energy companies after a two-year recession. Read more

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Shell repurchased $8.5 billion worth of shares in the first half of 2022, and the new buyback program is significantly higher than expected.

“The high oil price environment has helped Shell deliver exceptional results. The dividend may have stayed the same, but the share buyback program is good news for shareholders,” said Stuart Lamont, chief executive. investments at Brewin Dolphin.

Shell shares were up 0.9% at the opening of markets in London.

Its French rival TotalEnergies (TTEF.PA) also reported record profit of $9.8 billion in the quarter on Thursday and accelerated its buyback program. Read more

Norway’s Equinor (EQNR.OL) raised its special dividend and boosted share buybacks on Wednesday. Read more

US rivals Exxon Mobil and Chevron announce their results on Friday.

Oil and gas prices remained elevated during the quarter, with benchmark Brent crude averaging around $114 a barrel. Benchmark natural gas prices in Europe and global liquefied natural gas (LNG) prices averaged record highs during the quarter.

REFINING BOOST

Shell’s second-quarter adjusted profit came in at $11.47 billion, above the $11 billion forecast by analysts in a survey provided by the company.

That was up from $5.5 billion a year earlier and $9.1 billion in the first quarter of 2022.

Shell’s strong results reflected higher energy prices and refining margins, as well as strength in gas and power trading, the company said, but were partly offset by lower results from LNG exchanges.

Refining profit margins tripled in the quarter to $28 a barrel. They have weakened significantly in recent weeks amid signs of easing gasoline demand in the United States and Asia.

Shell said its refinery utilization would rise to 90-98% in the third quarter from 84% in the second quarter.

Its oil and gas production in the second quarter fell 2% from the previous quarter to 2.9 million barrels of oil equivalent per day (boepd).

Shell’s LNG liquefaction volumes were 7.66 million tonnes in the second quarter, compared to 8 million in the previous quarter. Volumes are expected to fall to between 6.9 and 7.5 million in the third quarter due to strikes at its Australian Prelude site and planned maintenance.

Shell used the surge in cash generation to further reduce its debt, which stood at $46.4 billion at the end of June, down from $48.5 billion three months earlier. Its gearing ratio, or leverage, decreased to 19.3%.

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Reporting by Ron Bousso and Shadia Nasralla Editing by Jason Neely and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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