Highest quarterly profit since 2008 on strong oil prices

Shell posted adjusted earnings of $9.1 billion for the first quarter of 2022.

Ben Stansall | AFP | Getty Images

LONDON – Oil giant Shell on Thursday reported its highest quarterly profit since 2008 on rising commodity prices, fueling calls for a one-off windfall tax on oil and gas companies to help UK households with soaring energy bills.

Shell reported adjusted earnings of $9.1 billion for the three months ended March, in line with expectations by analysts polled by Refinitiv. That compares to $3.2 billion for the same period last year and $6.4 billion for the fourth quarter of 2021.

The company also announced plans to increase its dividend for the first quarter by about 4% to $0.25 per share.

Shell has completed $4 billion of the company’s $8.5 billion share buyback program announced for the first half of the year. The remaining $4.5 billion of share repurchases is expected to be completed prior to the second-quarter earnings announcement.

Shares of the company rose 3% on Thursday morning.

Shell’s results reflect record profits seen across the oil and gas industry, even as many big energy majors face costly writedowns as a result of the Russian exit.

British rival BP on Tuesday announced plans to boost share buybacks after first-quarter net profit rose to its highest level in more than a decade. France’s TotalEnergies, Norway’s Equinor and US oil giants Chevron and Exxon Mobil also reported strong first-quarter gains on rising commodity prices.

Shell confirmed it took $3.9 billion in after-tax charges in the first quarter as a result of its exit from Russia. The company previously warned it could write off between $4 billion and $5 billion in the value of its assets after withdrawing from the country. The company said these charges are not expected to have an impact on adjusted earnings.

“The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption in global energy markets and demonstrated that secure, reliable and affordable energy simply cannot be taken for granted,” CEO Ben van Beurden said in a statement .

“The impact of this uncertainty and the associated higher costs are being felt far and wide. We have worked with governments, our customers and suppliers to manage the challenging impact and offer support and solutions where we can.”

Shell reported a sharp increase in full-year profit in 2021 on the recovery in oil and gas prices.

“Obscene” Winnings

Union groups and environmental campaigners have called record profits for UK fossil fuel companies “obscene” at a time when many consumers are grappling with soaring energy costs.

Opposition lawmakers have repeatedly urged Prime Minister Boris Johnson’s government to impose higher taxes on oil and gas companies to help families in need.

Finance Minister Rishi Sunak has suggested that such a policy could be possible if oil and gas companies fail to properly reinvest profits. However, Johnson has dismissed fresh calls for a windfall tax, saying it will discourage investment and keep oil prices high in the long term.

Meanwhile, the European Union said on Wednesday it plans to ban Russian oil imports within six months and refined products by the end of the year in its latest round of economic sanctions. The bloc’s proposed actions reflect widespread anger over the unprovoked attack by Russian President Vladimir Putin in Ukraine.

Oil prices surged on the news, contributing to those gains on Thursday morning.

International benchmark Brent crude futures traded at $110.9 in London, up nearly 0.7% during the session, while US West Texas Intermediate futures were at $108.4, up about 0.5 % higher.

https://www.cnbc.com/2022/05/05/shell-earnings-q1-2022.html Highest quarterly profit since 2008 on strong oil prices

Gary B. Graves

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