Shell reported a second-quarter profit of $11.5 billion, surpassing a record set 3 months earlier, helped by higher energy prices, strong natural gas trading, and a tripling of refining profit. Second quarter adjusted earnings were $11.47 billion, up from $5.5 billion a year earlier and up from $9.1 billion in first-quarter 2022. Adjusted EBITDA was $23.1 billion in second-quarter 2022 versus $19.0 billion in first-quarter 2022.
The company reported a $6-billion share buyback program for the quarter, which is expected to be completed by third-quarter 2022. With the current energy sector outlook and subject to board approval, shareholder distributions are expected to remain in excess of 30% of cash flow from operations (CFFO).
Shell’s CFFO increased by $3.8 billion versus first-quarter 2022 to $18.7 billion, driven by higher adjusted EBITDA and lower working capital outflows.
Shell also said it had received a $165 million dividend payment in April from the Russian Sakhalin-2 oil and gas joint venture that it intends to exit (OGJ Online, Mar. 7, 2022).
Refining margins tripled to $28/bbl in the quarter, despite recent weakness on signs of slowing gasoline demand in the US and Asia. Shell said its refinery utilization rate would improve to 90-98% in the third quarter, compared with 84% in the second quarter.
Shell’s oil and gas production in the second quarter fell 2% from the previous quarter to 2.9 MMboed.
Its LNG liquefaction volume in the second quarter was 7.66 million tonnes, down from 8 million tonnes in the previous quarter. Volumes are expected to fall to 6.9-7.5 million tonnes in the third quarter due to strikes at its Australian Prelude site and planned maintenance (OGJ Online, July 14, 2022).
With surging cash generation, Shell’s net debt was reduced by around $2.1 billion (4%) to $46.4 billion in second-quarter 2022.
