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Shell PLC on Thursday said earnings surged by two-thirds in the first half of 2022, as the oil major continued to benefit from a sharp rise in oil prices following Russia's invasion of Ukraine.
For the six months to June 30, adjusted earnings before interest, tax, depreciation and amortisation was $42.18 billion, up 67% from $25.20 billion last year. Income attributable to shareholders almost tripled to $25.15 billion from $9.09 billion.
For the three months to June 30, Shell reported adjusted earnings of $11.5 billion, smashing the record $9.1 billion generated in the first quarter.
Shell is profiting from the rising crude oil price. It grew 47% over the year to $109.41 per barrel on June 30, from $74.64 on June 30, 2021. As of Thursday, it stands at $107.67.
Revenue grew 59% to $184.26 billion from $116.18 billion a year ago, while marketing sales volumes fell 4.3% to 2.4 million barrels per day from 2.5 million a year ago. Compared to the first quarter of 2022, marketing volumes rose 1.4% to 2.406 million from 2.372 million, ‘mainly due to seasonal effects in Mobility, and Sectors & Decarbonisation,’ Shell added.
Tuning to returns, the oil major declared an interim dividend of $0.50, up 21% from $0.41 last year.
In addition, Shell launched a share buyback programme of $6 billion, which is expected to be completed before the release of its third quarter results, which will be out on October 27. The aim of the buyback is to reduce issued share capital, the company explained. It wants to buy back up to $3.6 billion London-contracted and $2.4 billion shares under Netherlands contracts.
‘With the current energy sector outlook and subject to board approval, shareholder distributions are expected to remain in excess of 30% of cash flow from operating activities,’ Shell said.
Shell's free cash flow jumped to $22.99 billion from $17.37 billion the year before.
‘With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike. Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future,’ said Chief Executive Ben van Beurden.
Regarding its outlook, the firm said: ‘Third quarter 2022 outlook includes substantially more planned maintenance compared with second quarter 2022,’ and cited uncertainty around strikes at Prelude's liquefied natural gas facility in Australia, which have been ongoing since June 10 as workers demand pay rises.
For the third quarter, the oil company expects LNG volumes at Integrated Gas to be around 6.9 million to 7.5 million tonnes compared to 7.39 million tonnes a year ago. Further, it anticipates production at Integrated Gas to be around 890,000 to 940,000 barrels of oil equivalent per day versus 938,000 in the third quarter of 2021.
In addition, third-quarter capital expenditure is expected to be in line with the $23 to $27 billion range for the full year.
Shell shares rose 1.0% to 2,138.50 pence each in London on Thursday morning.
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