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British oil and gas multinational Shell posted its Q1 2022 earnings report on Thursday which benefited from the soaring profits seen across the oil and gas industry.
British oil and gas giant Shell plc (LON: SHEL) recently released its Q1 2022 earnings report, which showed the highest quarterly profit since 2008. The upswing came out The primary reason for this upswing in fortune was the sustained rebound in oil and gas prices that began last year. In 2021, Shell also reported a sharp increase in full-year profit on soaring commodity prices.
Shell’s upbeat performance for Q1 2022 comes amid the costly write-downs endured by several energy majors from withdrawing from Russia.
As a result of Shell’s highest quarterly profit since 2008, there are now calls for a one-off windfall tax on oil and gas companies. This is to assist UK households that are currently facing steep energy costs.
Insight into Shell Q1 2022 Outing
For the period ended on March 31st, Shell posted adjusted earnings of $9.1 billion, which is on par with the consensus estimate. This revenue haul far outstrips the $3.2 billion it raked in over the same period a year earlier. Furthermore, it is also substantially higher than the $6.4 billion realized in the preceding quarter.
As a result of this, Shell announced intentions to increase its dividend by about 4% to $0.25 per share for the first quarter. In addition, the London-headquartered company also plans to effect a massive $8.5 billion share buyback program during the first half of 2022. Shell has stated that it already has $4 billion and will have the rest before it announces its Q2 earnings.
Shell’s UK rival BP plc also announced plans to boost share buybacks on Tuesday. This decision came about after its Q1 net profit ascended to its highest level in more than a decade. Other energy giants, including America’s Chevron and Exxon Mobil, France’s TotalEnergies, and Norway’s Equinor, all posted strong Q1 profits.
Exit from Russia
Shell touched on its exit from Russia and how that impacted its balance sheet and overall bottom line. According to the British oil and gas heavyweight, it took $3.9 billion of post-tax charges in the first quarter. In addition, the company previously cautioned that it could write off between $4 billion and $5 billion in asset value due to the exit.
However, Shell also noted that these charges would do little to affect its adjusted earnings. CEO Ben van Beurden issued a statement discussing the Eastern European war and its domino effect on global energy. According to him, “the war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted.”
Rising UK Energy Costs
Shell profits have jumped 36% year-to-date, and the latest Q1 results are drawing criticism from union groups and environmental campaigners. Their grievance is that UK fossil fuel companies are realizing “obscene” profits when several consumers face surging energy costs. Presently, opposition lawmakers are lobbying British Prime Minister Boris Johnson’s government to impose higher taxes on oil and gas firms. This is part of the government’s plan to help said struggling households.