Oil giant reports highest fourth-quarter profit in eight years and will again increase its dividend as the energy sector makes an impressive recovery from the coronavirus
03 February 2022 - 14:10
byRon Bousso
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London — Shell again boosted its dividend and share repurchases on Thursday after fourth-quarter profits hit their highest in eight years, fuelled by higher oil and gas prices and a strong gas-trading performance.
The strong results cap a year of impressive recovery for the oil major and the energy sector after demand and prices collapsed in 2020 in the wake of the coronavirus epidemic.
Shell shares were up 1.23% by 11.29am GMT.
The company, which moved its headquarters from The Hague to London last month, said it expected to increase its dividend by 4% in the first quarter of 2022 to $0.25 per share.
The company also announced it will buy back $8.5bn worth of shares in the first half of 2022, including $5.5bn from the sale of its Permian shale assets in the US. That compares with share buybacks totalling $3.5bn in 2021.
“2021 was a momentous year for Shell,” CEO Ben van Beurden said in a statement.
Van Beurden discusses riding the energy price wave, noisy activists, and more
Natural gas and electricity prices around the world have soared since the middle of last year on tight gas supplies and higher demand as economies rebounded from the Covid-19 pandemic. Benchmark European gas prices and Asian liquefied natural gas (LNG) prices hit all-time highs in the fourth quarter.
Shell, the largest trader of LNG, said its integrated gas earnings were boosted by “significantly higher” profits from trading. LNG sales rose to 16.72-million tonnes in the fourth quarter despite unplanned maintenance at its flagship Prelude floating LNG plant in Australia.
US rival ExxonMobil on Tuesday reported its biggest profit in seven years and said it planned to rise domestic production by 25% this year. Chevron’s profit was below estimates.
BP, TotalEnergies and Equinor report earnings next week.
Higher spending
Shell earlier this month officially scrapped “Royal Dutch” from its name and merged its dual-listed shares after moving its head office from The Hague to London as part of a tax and structure simplification drive, which van Beurden said would help the company plan to grow its low-carbon business.
Fourth-quarter 2021 adjusted earnings rose 55% from the previous quarter to $6.4bn, well above an average analyst forecast of $5.2bn provided by the company. That compares with earnings of $393 million a year earlier.
For the year, adjusted earnings rose to $19.3bn, compared with $4.85bn in 2020.
“Net income came in 22% ahead of consensus expectations and net debt fell sharply. On top [of that], Shell announced an $8.5bn share buyback programme for 1H [the first half of the year], also ahead of market expectations,” Morgan Stanley analyst Martijn Rats said. “We expect these results to support the shares.”
The energy company said it planned this year’s spending at the lower end of the $23bn-$27bn after spending $20bn in 2021.
Net debt dropped sharply throughout the year to $52.55bn from $75.4bn at the end of 2020. Shell’s debt-to-capital ratio, or gearing, dropped to 23.1% from 32.2% over the same period a year earlier.
Cash generation soared by a third to $45bn in 2021 as global economic activity recovered from the pandemic slump and oil and gas prices soared.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Shell pumps up the volume
Oil giant reports highest fourth-quarter profit in eight years and will again increase its dividend as the energy sector makes an impressive recovery from the coronavirus
London — Shell again boosted its dividend and share repurchases on Thursday after fourth-quarter profits hit their highest in eight years, fuelled by higher oil and gas prices and a strong gas-trading performance.
The strong results cap a year of impressive recovery for the oil major and the energy sector after demand and prices collapsed in 2020 in the wake of the coronavirus epidemic.
Shell shares were up 1.23% by 11.29am GMT.
The company, which moved its headquarters from The Hague to London last month, said it expected to increase its dividend by 4% in the first quarter of 2022 to $0.25 per share.
The company also announced it will buy back $8.5bn worth of shares in the first half of 2022, including $5.5bn from the sale of its Permian shale assets in the US. That compares with share buybacks totalling $3.5bn in 2021.
“2021 was a momentous year for Shell,” CEO Ben van Beurden said in a statement.
Van Beurden discusses riding the energy price wave, noisy activists, and more
Natural gas and electricity prices around the world have soared since the middle of last year on tight gas supplies and higher demand as economies rebounded from the Covid-19 pandemic. Benchmark European gas prices and Asian liquefied natural gas (LNG) prices hit all-time highs in the fourth quarter.
Shell, the largest trader of LNG, said its integrated gas earnings were boosted by “significantly higher” profits from trading. LNG sales rose to 16.72-million tonnes in the fourth quarter despite unplanned maintenance at its flagship Prelude floating LNG plant in Australia.
US rival ExxonMobil on Tuesday reported its biggest profit in seven years and said it planned to rise domestic production by 25% this year. Chevron’s profit was below estimates.
BP, TotalEnergies and Equinor report earnings next week.
Higher spending
Shell earlier this month officially scrapped “Royal Dutch” from its name and merged its dual-listed shares after moving its head office from The Hague to London as part of a tax and structure simplification drive, which van Beurden said would help the company plan to grow its low-carbon business.
Fourth-quarter 2021 adjusted earnings rose 55% from the previous quarter to $6.4bn, well above an average analyst forecast of $5.2bn provided by the company. That compares with earnings of $393 million a year earlier.
For the year, adjusted earnings rose to $19.3bn, compared with $4.85bn in 2020.
“Net income came in 22% ahead of consensus expectations and net debt fell sharply. On top [of that], Shell announced an $8.5bn share buyback programme for 1H [the first half of the year], also ahead of market expectations,” Morgan Stanley analyst Martijn Rats said. “We expect these results to support the shares.”
The energy company said it planned this year’s spending at the lower end of the $23bn-$27bn after spending $20bn in 2021.
Net debt dropped sharply throughout the year to $52.55bn from $75.4bn at the end of 2020. Shell’s debt-to-capital ratio, or gearing, dropped to 23.1% from 32.2% over the same period a year earlier.
Cash generation soared by a third to $45bn in 2021 as global economic activity recovered from the pandemic slump and oil and gas prices soared.
Reuters
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