Soaring gas prices bring Shell 2022 Q1 gains highest in 14 years

By Iliana Mavrou

Europe’s oil giant Shell plc (SHEL) on Thursday reported ­its highest quarterly earnings since 2008 amid soaring gas prices in Europe following Russia’s war in Ukraine.

The company’s adjusted earnings amounted to $9.1 billion in the first three months of 2022. The amount almost tripled since the $3.2 billion value recorded one year prior and surpassed the $7.8 billion profit made by the company during the first quarter of 2008.

In addition, Shell announced that it increased its dividend by at least 4% to $0.25 per share for the first half of 2022.

Out of the $8.5 billion total share buyback programme, the company had already completed $4 billion and the rest is scheduled to be completed before results are posted for the second quarter earnings.

Following this announcement, SHEL shares surged by nearly 3% in the early trading hours, up from last night’s close.

“The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted. The impacts of this uncertainty and the higher cost that comes with it are being felt far and wide. We have been engaging with governments, our customers and suppliers to work through the challenging implications and provide support and solutions where we can,” Shell plc CEO, Ben van Beurden said in a press release.

As a result of Shell’s exit from Russia, the company took $3.9 billion of post-tax charges in the first quarter. It was previously anticipated that Shell would take between $4 and $5 billion in post-tax impairments, however it was noted that the values would not affect the company’s earnings.

“Generating value through strong earnings and cash flow, coupled with maintaining a healthy balance sheet and continuing the disciplined delivery of our strategy, are crucial for Shell to play a leading role in the energy transition. This allows us to support our customers as they shift to cleaner energy. It’s also the best way for us to contribute to the security of energy supplies. Today’s results, the progress we are making with our $8.5 billion share buyback programme and the reduction of our net debt to $48.5 billion all show we remain on track, and give us the confidence to plan future shareholder distributions and disciplined investments that will accelerate our strategy,” van Beurden added.

Earlier this week, the British oil and gas firm BP plc (BP) also reported a surge in its profit for the first quarter of 2022, surpassing $6.2 billion, compared with $2.6 billion this time last year.

France’s TotalEnergies (TTE), Norway’s Equinor (EQNR) as well as US companies Chevron (CVX) and ExxonMobil (XOM) also announced strong Q1 2022 earnings.

The European Union has imposed major sanction on Russia, banning oil imports from the country as a protest against the country’s military operation in Ukraine. Gas prices in Europe have been soaring. In the past week, following Gazprom’s pause of supplies to Bulgaria and Poland last week, gas prices soared by 20%.