Shell’s Record Profit of $9.1bn, The Highest in A Decade

Shell Profits Beyond Analyst Expectations

Shell, the London-based multinational oil and gas company, reported today their first-quarter results, and they are nothing short of spectacular. Similar to Shell’s fellow energy supermajors, the company reported record profits, its highest quarterly profit in more than a decade, surpassing even analysts’ estimates of $8.67 billion.

Specifically, the multinational giant posted an adjusted net income of $9.13 billion, up from $6.4 billion in the fourth quarter of 2021, and almost triple the profit year-over-year. The commendable boost-up was attributed to the surge in energy prices, the increased volatility in the global energy markets which favored the company’s trading division, and to the lower operating expenses and tax.

Shell shares soared 3.3% in early trading, and the company also raised its quarterly dividend to $0.25 per share, up from $0.17 in the first quarter of 2021.

Shell’s Exit From Russia Only Minimally Affected Q1 Earnings

Overall, Shell had considerably less exposure to Russia compared to other European competitors, such as BP and Total. According to investment bank Jefferies, in 2022, before Russia’s military invasion of Ukraine, the country was expected to contribute to only about 5 percent of Shell’s energy production. In comparison, Russia would account for 16 percent of the annual energy production for Total and 28 percent for BP.

The company announced in March a series of measures in response to Russia’s invasion of Ukraine such as that it would shut its service stations, aviation fuels, and lubricants operations. By the end of 2022, it is also expected that the oil major will cease almost all its long-term Russian crude oil purchases.

Shell’s decision to exit Russia resulted in the company taking a $3.9 billion post-tax charge, denting only minimally a very strong quarter.

Other Energy Companies and Supermajors Also Reported Sizeable Profits

Shell’s report on its striking Q1 earnings was the latest in a long list of better-than-expected profits from the world’s biggest oil and gas companies. Just this week, BP also unveiled underlying quarterly profits of $6.2 billion, the highest Q1 earnings since 2008. Likewise, Equinor, a Norwegian state-owned multinational energy company, came out as the grand winner in Europe’s energy crisis. By selling gas at prices four times as high compared to a year ago, the energy company generated its highest-ever quarterly pre-tax earnings of $18 billion (compared with a revised $4.1 billion year-over-year). According to Equinor, “due to low gas stocks in Europe, high demand and tight supply,” European natural gas is, on average, priced about 345% more than what it was priced one year earlier.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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