Shell has declared $9.5 billion in earnings from its operations in the third quarter of 2022.
Reacting to this development, Shell plc Chief Executive Officer, Ben van Beurden said: “We are delivering robust results at a time of ongoing volatility in global energy markets.
We continue to strengthen Shell’s portfolio through disciplined investment and transform the company for a low-carbon future. At the same time we are working closely with governments and customers to address their short and long-term energy needs. Today we are announcing a new share buyback programme resulting in an additional $4 billion of distributions, which we expect to complete by our Q4 2022 results announcement. Furthermore, we plan to increase the dividend per share (DPS) for the fourth quarter, which will be paid in March 2023, by an expected 15%, subject to Board approval.”
He described it as robust result from a resilient portfolio.
- Robust performance in a turbulent economic environment with lower crude prices and higher gas prices compared with Q2 2022. Adjusted Earnings of $9.5 billion in Q3 2022, with Adjusted EBITDA of $21.5 billion.
- Strengthening and simplifying the portfolio through the energy transition with completion of the Spring Energy (India) acquisition, participation in the North Field South LNG expansion (Qatar) in October, the Rosmari-Marjoram field FID (Malaysia), the announced Aera Energy divestment (California, USA) and the acquisition of Shell Midstream Partners (USA).
- Disciplined cash capex: expected to be in the $23 – 27 billion range in 2022, evenly split between our Growth, Transition and Upstream pillars.
- $4 billion share buybacks announced, expected to be completed by Q4 2022 results announcement; total distributions in excess of 30% of CFFO for the last four quarters.
He said this would be subject to Board approval, intention to increase DPS by an expected 15% for the fourth quarter, which will be paid in March 2023. Announced 2022 shareholder distributions $26 billion.
Also commenting on this development, Wael Sawan who will be succeeding Ben van Beurden as Chief Executive Officer, effective January 1, 2023, said CFFO of $12.5 billion for Q3 2022 is driven by lower Adjusted EBITDA compared with Q2 2022 and working capital outflows.
“In working capital, the inventory price help in Q3 2022 resulting from lower crude prices is more than offset by the European gas inventory build-up and initial margin outflows in our Renewable and Energy Solutions business as well as regular accounts receivable and payable movements across the portfolio.”
“As a result, net debt increased by ~$2.0 billion (~4%), to $48.3 billion in Q3 2022, which includes the absorption of Spring Energy’s debt.
Adjusted Earnings below Q2 2022 mainly reflecting lower trading and optimisation results in addition to lower volumes including the impact of maintenance and the Permitted Industrial Actions at Prelude.”
Global energy prices soared after the invasion of Ukraine as Western governments imposed sanctions on Russia and the Kremlin curtailed natural gas shipments to Europe, fueling inflation that has spread pain across economies. Brent crude, a benchmark for European oil prices, averaged $100.84 a barrel in the third quarter, 37% higher than a year earlier. Wholesale natural gas prices in Europe more than tripled in the same period.
The U.K., Spain and Italy have already imposed taxes on the windfall profits of energy producers as high oil and gas prices — which have fallen from summer highs — squeeze homes and businesses. The European Union passed such a levy last month.
Britain in May imposed an additional 25% tax on profits earned from oil and gas extraction in the U.K. The temporary tax is designed to raise about 5 billion pounds ($5.8 billion) through the end of 2025. The tax cost Shell $361 million in the third quarter, the company said.
Opposition parties are pressuring Prime Minister Rishi Sunak, who took office this week, to increase the windfall profits tax as he rushes to stabilize Britain’s finances with new tax and spending plans. The government is scheduled to deliver its autumn financial statement to Parliament on Nov. 17.
Rachel Reeves, the opposition Labour Party’s spokeswoman on Treasury issues, renewed that call Thursday.
Despite “booming oil profits,” the government still refuses to impose a “proper windfall tax on energy producers,” she tweeted after Shell reported earnings.
Olusola Bello