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Shell posts record profit for second consecutive quarter

Shell announced record profits for a second straight quarter and a $6 billion share buyback plan as fallout from the war in Ukraine generates heavy profits for the world’s oil and gas companies.

Europe’s largest oil company posted adjusted earnings – the profit measure most closely followed by analysts – of $11.5 billion in the second three months of the year, breaking the A record of 9.1 billion dollars in the first quarter.

That beat average analyst estimates of $11 billion and was more than double the $5.5 billion it posted a year ago.

shell It produced less oil than in the first quarter, but enjoyed higher prices, reflecting the rising cost of crude oil in April, May and June following Russia’s invasion of Ukraine in February.

Higher refining margins drove performance in its chemicals and products business, while it also cited “particularly strong” earnings from its gas and power trading businesses.

This was partially offset by slightly weaker performance in its giant integrated gas division. Combined gas profits fell by about 8 percent from the first quarter due to lower trading profits and a decrease in liquefied natural gas volumes following its decision to end its participation. Sakhalin 2 LNG project in Russia.

“With volatile energy markets and the ongoing need for action to address climate change, 2022 continues to present enormous challenges,” said CEO Ben Van Burden.

Shell kept its dividend at $0.25 per share, but said that with the $6 billion share buyback plan, total distributions to shareholders would be “significantly above 30%” of cash flow from operations.

A new round of share buybacks follows $8.5 billion in repurchases which were completed in the first half of the year.

The dividend is still well below the pre-Covid level of $0.47 per share. In 2020, Shell cut the dividend by two-thirds to $0.16, the first reduction since World War II, as the shutdowns hit demand and pushed oil prices below $20 a barrel.

Biraj Borkhataria, an analyst at RBC Capital Markets, said the lack of a dividend increase was compensated by a “much higher” buyback, resulting in “higher-than-expected distributions” overall.

“On a constant dividend, it is likely that Shell could return close to $30 billion to shareholders this year, or more than 15% of its market value,” he said.

Cash flow from operations, excluding working capital movements, came in at $23 billion in the first half of 2022, higher than analysts’ average forecast of $19.2 billion. Net debt fell to $46.4 billion compared to $48.5 billion three months earlier.

Shell posts record profit for second consecutive quarter Source link Shell posts record profit for second consecutive quarter

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