As 25 million British consumers awaited news this morning of a new Ofgem-sanctioned price cap set push energy bills up an eye-watering 50%, fossil fuel behemoth Shell revealed quarterly earnings in the three months to January flipped in shareholders’ favour to a positive $11.1 Billion, against a loss of $4.4 Billion in 2020.
The oil group’s adjusted earnings for the full calendar 2021 rose to $19.3bn, from $4.8bn a year earlier At group level, adjusted earnings for the quarter to January were $6.4 billion.
Interim dividend for the current quarter to March 2022 will rise 4%, the company announced.
From the firm’s Integrated Gas division, earnings rocketed nearly fourfold, to just over $4 billion from $1.1 billion compared with 2020’s equivalent quarter.
Compared with the third quarter of 2021, the gas division’s adjusted earnings “primarily reflected significantly higher contributions from LNG trading and optimisation….and higher realised prices for LNG, oil and gas. This was partly offset by higher operating expenditure”, said today’s announcement.
Shell is the world’s largest trader of LNG. It said it had benefited from higher prices and “significantly higher trading and optimisation margins.”
Compared with the third quarter 2021, total oil and gas production remained at a similar level due to higher maintenance activities partly offset by field ramp-ups. LNG liquefaction volumes increased by 7% due to higher feed gas supply.
Chief executive Ben van Beurden described 2021 as ‘a momentous year’ for the company. “We delivered very strong financial performance . . . and our financial strength and discipline underpin the transformation of our company”, he added.
The debt-to-equity ratio of the fossil fuel behemoth’s balance sheet improved from 32.2% to 23.1% year on year.
Shell’s results, in line with recent reporting by hydrocarbon majors, will strengthen calls including from the Labour Party and power retailers such as Dale Vince’s Ecotricity for a windfall tax on gas extractors and traders.
The company dropped its ‘Royal Dutch’ tag in November, and simplified its reporting structures. Renewables, currently lumped in with ‘integrated gas’, will from April be quoted separately.
Reflecting that growing renewables business, in December Shell bought US solar and storage developer Savion. In 2022’s opening month the company celebrated winning with partner Scottish Power its bid to develop 5GW of floating wind turbines off Scotland’s coast, and opening up a 20MW hydrolyser plant in China.
During 2021’s final quarter, the leviathan completed the sale for $8.5 billion of its fracking operations in the US’ Permian Basin. The cash will be distributed to shareholders, under its accelerated share buy-back scheme.
More details here.