LONDON, October 27 (Reuters) – Shell Corporation (coincidence) On Thursday, it posted a third-quarter profit of $9.45 billion, just below a record high in the second quarter, due to weak refining and gas trading operations, and said it would boost dividends sharply by the end of 2022 when the company’s CEO leaves.
The British oil and gas giant also expanded its stake buyback program, announcing plans to buy $4 billion in shares over the next three months after completing $6 billion worth of purchases in the second quarter.
Shell said it plans to increase its dividend by 15% in the fourth quarter, when CEO Ben van Beurden will step down after nine years in the job. Distributions will be paid in March 2023.
This will be the fifth time that Shell has raised its dividend since it cut it more than 60% in the wake of the 2020 COVID-19 pandemic.
Shell shares were up about 6% by 1430 GMT, compared to a 3.5% gain for the broader European energy sector (.SXEP).
Wael Sawan, current head of Shell’s Natural Gas and Low Carbon Division, will succeed Van Beurden.
With profits of $30.5 billion so far this year, Shell is on track to surpass its record annual profit of $31 billion in 2008.
The strong earnings are likely to intensify calls in Britain and the European Union for more unexpected taxes on energy companies as governments grapple with rising gas and electricity bills.
Van Beurden said the energy industry “must be willing and accepting” that it will face higher taxes to help struggling parts of society.
Shell shares have gained more than 40 percent so far this year, driven by higher oil and gas prices following the Russian invasion of Ukraine in February and amid tight global oil and gas supplies.
French rival TotalEnergies posted record profits in the third quarter.
[1/2] A view shows a plate with the Shell logo at the company’s gas station in Saint Petersburg, Russia, May 6, 2022. REUTERS/Anton Vaganov/File Photo
WOES LNG
Shell’s adjusted quarterly profit of $9.45 billion, which slightly beat expectations, was hurt by a sharp 38% quarterly decline in its gas and renewable energy division, the largest in the company.
Second-quarter profit hit a record $11.5 billion.
The world’s largest trader of liquefied natural gas (LNG) produced 7.2 million tons of LNG in the period, 5% lower than the previous quarter, mainly due to ongoing strikes at the Australian Prelude facility.
The gas trading business was hit this quarter by “supply constraints, along with material differences between paper and physical deliverables in a volatile and volatile market.”
Refining, chemicals and oil trading division earnings also fell sharply by 62% in the quarter due to weak refining margins.
Shell said it will stick to its plans to spend between $23 billion and $27 billion this year.
Shell’s cash flow in the third quarter fell sharply to $12.5 billion from $18.6 billion in the second quarter due to a significant outflow of working capital of $4.2 billion as a result of changes in the value of European gas inventories.
Shell’s net debt rose by about $2 billion to $46.4 billion due to lower cash flow from operations and to pay for its recent acquisition. The debt-to-capital ratio, known as indebtedness, has also risen to more than 20%.
(Reporting by Ron Bousso and Shadia Nasrallah). Editing by Jason Neely, Simon Cameron Moore and Paul Simao
Our criteria: Thomson Reuters Trust Principles.
“Twitteraholic. Total bacon fan. Explorer. Typical social media practitioner. Beer maven. Web aficionado.”