Shell – Surging Oil Prices Bolster Profits, Shareholder Returns

Shell – Surging Oil Prices Bolster Profits, Shareholder Returns
MichaelGaida / Pixabay

A $3.9bn charge related to the withdrawal from Russia meant Shell PLC (LON:SHEL)’s net profits fell 38% from the fourth quarter to $7.1bn. However, excluding this and the impact of price fluctuations on contracts and investments, underlying cash profits (EBITDA) rose 16% to $19.0bn.

A $0.25 dividend was announced, reflecting a 4% increase from the fourth quarter. The group’s completed $4.0bn of the previously announced buyback programme. The second $4.5bn of repurchases is planned for the current period.

.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; }

Get The Full Walter Schloss Series in PDF

Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q1 2022 hedge fund letters, conferences and more

You Want Hedge Funds Who Have Skin In The Game

stocks performance 1651757664A number of studies have noted over the years that companies with the highest insider ownership, tend to outperform peers. The logic behind this conclusion is easy to understand. Managers who own a significant chunk of shares are unlikely to embark on value-destructive acquisitions or put to their company at risk as they stand to Read More

Shares rose 3.1% following the announcement.

Shell’s Record Profits

Laura Hoy, Equity Analyst at Hargreaves Lansdown:

“The Cinderella story we’ve seen among the oil majors continued this week as Shell posted record profits thanks to an extremely accommodative environment. The group’s exit from Russia took a $4bn bite out of the bottom line, but excluding this one-off expense, the group’s been firing on all cylinders as rising prices offset minor volume declines.

That’s given management the confidence to continue rewarding shareholders, with $5.4bn spent to line their pockets in the first quarter alone. That could tick even higher if oil continues its march upward – the group’s aiming to up its distributions to over 30% of operating cash flow.

Calls for a windfall tax have been rebuffed by claims that the majors will start to clean up their acts, spending some of the excess to build out their renewables divisions. This quarter was the first time we got a glimpse of how well this part of Shell’s business is functioning, and it was encouraging to see underlying profits were on the up.

While renewables is just a drop in Shell’s $19bn bucket, it’s likely to become a much larger slice of the pie as the energy transition ramps up. This technology is largely unproven, so oil and gas investors that have become accustomed to generous returns are taking a leap of faith. If the group’s able to build out this part of the business to become a reliable profit driver while oil prices are still high, it would make the transition all the smoother.”


About Hargreaves Lansdown

Almost 1.7 million clients trust us with £141.2 billion (as at 31 December 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

Updated on May 5, 2022, 11:09 am

Comments are closed.