West News Wire: As the oil supermajor benefited from the spike in energy prices brought on by Russia’s invasion of Ukraine, Shell reported record earnings of nearly £10 billion between April and June and planned to pay out dividends totaling £6.5 billion to shareholders.
The FTSE 100 business exceeded its prior high, reached between January and March, by 26% during the second quarter of the year, with adjusted profits of $11.5 billion (£9.5 billion). The profits exceeded analyst expectations and were more than twice as large as during the same period in 2021.
In contrast to suffering consumers and a large portion of the rest of the economy, the business has been booming for Shell and other significant oil and gas businesses. Higher energy prices have caused inflation to soar to 40-year highs in the UK and elsewhere, and which threaten to tip economies into recessions across much of the world.
British Gas owner Centrica, also a member of the FTSE 100, on Thursday reinstated its dividend as it reported bumper operating profits of £1.3bn during the first half of 2022 thanks to higher prices for the oil and gas it drills.
Chris O’Shea, Centrica’s chief executive, said it was “the most challenging energy crisis in living memory” even as his company reported its highest adjusted operating profits since 2013.
The scale of the oil companies’ profits prompted the UK government to eventually give in to demands for a windfall tax to redistribute some of the profits, although some senior Conservative ministers are thought to favour removing the tax, amid a leadership campaign that will lead to a new prime minister and cabinet in September.
The windfall tax known as the energy profits levy did not come into force until 14 July, meaning the companies’ second-quarter profits and payouts to shareholders were not affected.
The sector has remained a bonanza for oil companies and their shareholders. Shell investors received $7.4bn in the first quarter of 2022 and will receive another $6bn in a share buyback and $1.8bn in dividends announced on Tuesday.
Shell said it had experienced “higher realised prices, higher refining margins and higher gas and power trading”.
Vladimir Putin’s invasion means Shell may have to abandon its stake in the Sakhalin-2 gas project with Russia’s Gazprom as well as petrol stations in the country. Yet the recognised costs of abandoning Russia are $4.3bn just over a third of the profits Shell has made in three months after Kremlin troops entered Ukraine. The company had already booked costs worth $4.2bn related to its withdrawal from Russia, but it increased this estimate by only $111m in the second quarter of the year.