Oil and gas major Shell recently reported its highest-ever profit inflow of approximately $40 billion for 2022.
Shell (LON: SHEL) has posted its highest-ever annual profit of $40 billion, which comes in the company’s full-year 2022 earnings report. On Thursday, the British multinational oil and gas firm reported adjusted earnings of $39.9 billion for the entire 2022. This sum comfortably exceeded Shell’s previous annual record of $28.4 billion in 2008. In addition, Shell’s latest profit haul is also more than double the oil giant’s full-year 2021 profit of $19.29 billion.
A number of favorable macroeconomic factors bolstered Shell’s highest-ever profit haul. These include surging fossil fuel prices and robust crude demand following Russia’s military invasion of neighboring Ukraine last year.
Shell’s full-year 2022 profit also exceeded the laudable consensus estimates of $38.3 billion for the same period. The London-based oil giant reported adjusted earnings of $9.8 billion for the final quarter of last year.
Furthermore, following its impressive 2022 outing, Shell announced a $4 billion share buyback program. The company expects to complete this buyback scheme by May when its Q1 2023 results would be ready. In addition, Shell also plans to increase its fourth-quarter dividend per share by 15%.
Shell CEO Comments on 2022 Highest-Ever Profit Haul
In a media session, Shell chief executive officer Wael Sawan touched on the company’s 2022 highest-ever profit haul. In high spirits, Sawan enthused at his first earnings interview since assuming the CEO role on January 1st:
“It is a huge year for Shell and a huge year to look back on as well. I feel privileged to be stepping into this role at such a great point in the company’s history. As we look ahead, I think we have a unique opportunity to be able to succeed as the winner in the energy transition. We have a portfolio that I think is second to none.”
Furthermore, the CEO also said he would focus on performance and capital discipline in light of Shell’s laudable performance.
Shell’s cash capital expenditure outlook for 2023 is between $23 billion and $27 billion. Sawan explained that just over one-third of this amount would go into areas such as renewables. The oil mainstay seeks to become a net-zero emissions business by 2050 and reported Renewable and Energy Solutions adjusted Q4 2022 earnings at $293 million. This sum marked a substantial drawdown from the $383 million that Shell realized in the third quarter of last year.
The founder of Follow This, Mark van Baal, pointed out that Shell cannot claim to be in transition if its fossil fuel investments dwarf those of renewables.
Last month, Shell expected a $2 billion tax hit in the fourth quarter of 2022 following new European Union and UK levies. According to Sawan:
“Ultimately, taxes are a matter for governments to decide on. We, of course, engage and provide perspectives and the key perspective that we try to provide is a context around the fact that companies like ourselves that need to invest multiple billion dollars to support the energy transition and require a secure and stable investment climate.”
According to Refinitiv data, the West’s oil and gas giants could make a combined $190 billion in profits for 2022.