One of the topmost oil giants, Shell, reported a record first-quarter profit of $9.13 billion, boosted by higher oil and gas prices, stellar refining profits and the strong performance of its trading division. The income attributable to Shell shareholders increased to $7.1 billion in the first quarter of 2022, compared to $5.7 billion in the previous quarter, even after writing down $3.9 billion post-tax as a result of its decision to quit the business in Russia, it topped its previous highest quarterly profits of 2008.
Shell announced in early April that it will write off $4 billion to $5 billion in assets as a result of its exit from Russia. This charge is not expected to have an impact on adjusted earnings. By the end of this year, Shell said it would stop all of its long-term Russian crude oil purchases, except two contracts with a “small, independent Russian producer” that it did not name.
Shell, the world’s largest LNG trader, said sales of the fuel rose by 9 per cent in the quarter to 18.3 million tonnes. LNG is seen as crucial to ending Europe’s reliance on Russian pipeline gas. Shell maintains Russia’s assets of $1 billion in value on its balance sheet, including a dividend for its stake in the Sakhalin-2 LNG project, lubricant and retail station inventory and a gas contract, Chief Financial Officer Sinead Gorman said.
The size of energy companies’ profits has led to calls from Britain’s opposition Labour Party to levy a windfall tax to support people struggling to pay their energy bills because of the surge in prices. The ruling Conservatives have rejected the idea, saying it would discourage companies from investing profits in the transition to lower-carbon energy.
It said its dividend payments and share repurchases reached $5.4 billion in the quarter, part of its plan to buy back $8.5 billion in shares in the first half of the year. Its dividend rose to 25 cents per share as planned.
In the current environment, it said it expects shareholder distributions to exceed 30 per cent of cash flow in the second half.
Shell’s adjusted earnings from refining and marketing oil products leapt to $1.17 billion from a loss of $130 million in the previous quarter and a profit of $781 million last year despite volumes falling to around 1.6 million BPD from 1.9 million.
Shell’s quarterly cash flow of $14.815 billion helped it to cut its debt burden to $48.5 billion from $52.6 billion at the end of 2021.
Source: Oriental news, USAToday, Offshoreenergy
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