Page 12 - EurOil Week 43 2022

EurOil INVESTMENT EurOil

Shell sees Q3 profit sink

UK UK major Shell reported earnings for the third reduced according to investments made in UK
quarter that were below those of the previous oil and gas supply.
Shell nevertheless has three months, but nevertheless announced it Production averaged 1.7mn barrels of oil
expanded its dividen would expand its dividend and initiate another equivalent per day, down from 1.9mn boepd
and is initiating another $4bn buyback plan. in the previous quarter, as a result of Shell
$4bn buyback plan. The company achieved $11.4bn in pre-tax derecognising the Salym oil development in
profits for the period, compared with $26bn in Russia and other deferrals. Shell announced
the second quarter. But the result will not tarnish its intention to exit the project, which it
what has been a brilliant financial year for Shell, jointly operates with Gazprom Neft, after the
which has seen revenues so far in 2022 reach war broke out in Ukraine in late February. It
$285bn, with over $48bn in profits. withdrew from management of the company
Shell attributed the dip in earnings in the in July.
third quarter to lower LNG trading and optimi- Weak refining margins struck Shell’s chemi-
sation numbers, as well as weaker chemical and cals and products business, with income sinking
refining margins and higher operating costs. from $2.1bn to $980mn. There has been a recov-
These factors were partially offset by increased ery in global product supply, increased feedstock
volumes of high-value barrels from deepwater and utility costs and higher operating costs, Shell
projects. said. While global crude oil prices remain high,
Meanwhile, the buyback push continues, there has been some regulation in Europe and
with some $6.8bn distributed in the third quar- elsewhere to curb the price of motor fuels, which
ter alone and a further $4bn announced to be has been another factor.
carried out by the end of the year. Pending board Renewables took a significant hit, with losses
approval, the company said it would raise the expanding from $173mn in the second quarter
dividend per share by an anticipated 15% for the to more than $4bn in the third. The company
fourth quarter, which will be dealt out in March attributed this to lower trading and optimisation
2023. results for its gas and power division because of
Breaking it down by segment, the company’s price volatility across North America, Europe
lower trading volumes and higher prices resulted and Australia, as well as higher operating
in a $1bn drop in revenue for the integrated expenses. Renewables performance has gener-
gas business. Shell also attributed the slump to ally been weak in recent months, with wind tur-
“seasonality and supply constraints, coupled bines in particular producing less power, driving
with substantial differences between paper and up cost.
physical realisations in a volatile and dislocated The latest financial results are the last to
market.” be presided over by outgoing CEO Ben van
The company’s production was down 2% Beurden, who is due to be replaced by Shell vet-
quarter on quarter, which the company said was eran Wael Sawan at the beginning of next year.
the result of industrial action at its Prelude LNG Van Beurden said the company had managed to
export plant off the coast of Australia. achieve “robust results at a time of ongoing vola-
Upstream income was also down compared tility in global energy markets.”
with the previous three months, but was still “We continue to strengthen Shell’s portfolio
much higher than in the third quarter of last through disciplined investment and transform
year, coming in at $5.3bn. Shell blamed the quar- the company for a low-carbon future,” he said.
terly drop on the UK’s Energy Profits Levy – a “At the same time, we are working closely with
windfall tax that was imposed by Prime Minis- governments and customers to address their
ter Boris Johnson’s government that resulted in short- and long-term energy needs.”
Shell booking $361mn in charges for the three Moving forward, Shell said it would continue
months. But Shell noted that it was not liable for with “disciplined cash capex,” forecasting a range
extra North Sea tax fees because of its heavy cap- of $23-27bn for the full year, split evenly among
ital investment in the region. The windfall tax is its different divisions. ™

P12 www. NEWSBASE .com Week 43 29•October•2022