Shell PLC reported adjusted earnings of $9.1 billion in first-quarter 2022 amid a volatile geopolitical and macroeconomic environment, marking the highest quarterly profit since 2008. That also compared with $3.2 billion over the same period a year earlier and $6.4 billion for fourth-quarter 2021.
Shell increased dividends by about 4% to $0.25/share for the first quarter. Of the $8.5 billion share buyback program announced for first-half 2022, $4 billion has been completed to date. The remaining $4.5 billion share buybacks are expected to be completed before this year’s second-quarter results announcement. With the current macro-outlook and subject to board approval, shareholder distributions for second-half 2022 are expected to be over 30% of cash flow from operations.
The company took a $3.9 billion after-tax charge in the first quarter due to its Russian exit (OGJ Online, Feb. 28, 2022). The company previously noted a potential write-off of $4-5 billion in asset values after pulling out of the country. Shell said the charges would not affect adjusted earnings.
“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,” said Shell Chief Executive Officer Ben van Beurden.
“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,” he continued.
Reported adjusted EBITDA for first-quarter 2022 was $19 billion, compared to $16.3 billion in fourth-quarter 2021. Net debt was reduced by about 8%, to $48.5 billion in this year’s first quarter from $52.6 billion fourth-quarter 2021.
For the integrated gas segment, adjusted earnings of $4.1 billion benefited from higher realized prices offset by lower production due to maintenance activities, including the planned turnaround of one of the trains at Pearl GTL and maintenance at Prelude FLNG. Second-quarter 2022 outlook reflects the derecognition of Sakhalin-related volumes.
Upstream business posted adjusted earnings of $3.45 billion, up from $2.83 billion from the previous quarter, benefited from higher prices, partly offset by impacts from the Permian divestment (OGJ Online, Sept. 20, 2021). Upstream production for the year’s first quarter was 4% below fourth-quarter 2021, mainly driven by Permian divestment and lower demand due to a milder winter, partly offset by comparative help from Hurricane Ida recovery and lower maintenance.
The chemical and products segment reported adjusted earnings of $1.17 billion amid higher realized refining margins and improved utilization.
