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Shell Makes Record Profits For Two Quarters In A Row

Another Big Oil company, Shell, reported record profits in the second quarter of 2022 due to an increase in oil and gas prices and refining margins.

All members of Big Oil – ExxonMobil, Chevron, ConocoPhillips, BP, Shell, Total, and Eni – have reported massive profits for the quarter with Exxon and Chevron achieving record quarter earnings, beating earnings in quarters that saw $147 per barrel prices in 2008.

Shell joined the record-breaking party by posting an $11.5 billion second-quarter profit smashing the record from the previous quarter of $9.13 billion – the first quarter profit was, to remind, three times what the company earned in the first quarter of 2021. Both 1Q and 2Q of 2022 were new records for Shell which also had its previous highest profit in a quarter back in the $147 per barrel boom of 2008.

Shell’s income attributable to its shareholders in the quarter totaled $18 billion compared to $7.1 billion in the first quarter of the year and just $3.4 billion in the second quarter of last year.

This massive rise compared with the first quarter of 2022 was mainly reflected in higher realized prices, higher refining margins, higher gas and power trading, and optimization results. It was, however, partly offset by lower LNG trading and optimization results.

Second quarter 2022 income attributable to Shell shareholders also included post-tax net impairment reversals of $4.3 billion following the revision of Shell's mid- and long-term commodity price assumptions reflecting the current energy market demand and supply fundamentals.

Adjusted EBITDA of $23.1 billion in Q2 2022 was also higher than the first quarter of the year which saw the company report this figure at around $19 billion.

It is worth noting that Shell did see a 2 percent decrease in oil and gas production in the second quarter from the previous quarter to 2.9 million barrels of oil equivalent per day (boepd).

Shell also explained that it was strengthening energy security through natural gas investments in Pierce and Jackdaw projects in the UK, its participation in the North Field LNG expansion project in Qatar, and the final investment decision in the Crux field in Australia.

The company also positioned itself for the future of energy with a final investment decision for Holland Hydrogen I in the Netherlands and with progressing the completion of the acquisition of Sprng Energy in India. Currently, the oil giant’s disciplined cash capex is expected to be in the $23 – 27 billion range in 2022.

Shell announced it was increasing shareholder distributions through a $6 billion share buyback program, which is expected to be completed by the announcement of the results for the next quarter. As for its net debt, it was reduced by about $2.1 billion and now stands at $46.4 billion.

"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,” Shell CEO Ben van Beurden said.

“And, crucially, our Powering Progress strategy is delivering strong results for our shareholders on the back of years of portfolio high grading, combined with robust operational performance. We are increasing shareholder distributions through a $6 billion share buyback program which is expected to be completed by Q3 2022 results," he added.

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