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Thursday, May 09, 2024

Energy company Shell reports profits of $9.5bn for Q3 of 2022 but not at record levels seen in first half of year

Energy company Shell reports profits of $9.5bn for Q3 of 2022 but not at record levels seen in first half of year

The London-listed oil and gas company had reported record profits in the first half of the year amid soaring oil and gas prices.

Shell has reported operating profits of $9.5bn (£8.19bn) for the third quarter of this year, lower than that of the three months before but still more than double the same period in 2021.

The London-listed energy giant reported two consecutive quarters of record profit in the first half of the year at a time of soaring oil and gas prices. Shares in the company jumped by 4.5% on Thursday morning, and BP shares were up by nearly 3%.

The earnings are lower than expected. Shell had been forecast to report net earnings of $10.5bn in the third quarter, compared with net earnings of $11.5bn in the second quarter.

The profits were lower compared with the second quarter because of lower liquefied natural gas (LNG) trading, lower chemicals and refining margins and higher underlying operating expenses.

The total amount paid to shareholders during the three months was $6.8bn. The company paid a dividend of $0.25 for each share held.

But Shell wants that amount to increase. Subject to board approval, it intends to increase the amount per share by 15% for the fourth quarter, which would be paid in March next year.

On Thursday the company also said it is to buy back shares worth $4bn from shareholders by the time fourth quarter results are announced, it follows a $6bn round of share buybacks announced in the second quarter results statement.

The profits are likely to increase calls for more one-off windfall taxes, something that Shell CEO Ben van Beurden said the company is ready for and has been working with the Treasury on.

"We are in continuous dialogue with the Treasury in a constructive way", he said

It's a "societal reality" that governments will intervene while "a lot of people ... particularly the most vulnerable" are struggling with the cost of living.

Addressing the media after the results announcement he said the company should have a seat at the table to "help government design the right rules".

The company is ready for windfall taxes and expects them to be in place next year, he added.

When she was prime minister Liz Truss ruled out any additional windfall tax beyond the one introduced in May. The May energy profits levy taxed profits at 25% and was introduced by current Prime Minister Rishi Sunak when he was chancellor.

Current Chancellor Jeremy Hunt has said "nothing is off the table" when asked if he would implement a windfall tax.

Mr van Beurden had previously called on the government to tax oil and gas companies in order to protect the poorest people in society from soaring energy costs.

Speaking at the Energy Intelligence Forum in London, Ben van Beurden said: "One way or another there needs to be government intervention that somehow results in protecting the poorest.

"That probably may then mean that governments need to tax people in this room to pay for it."

The government recently announced it is to go ahead with a windfall tax on the renewable sector which has been enjoying bumper profits off the back of high gas prices.

Commenting on the profits, Ed Miliband MP, Labour's Shadow Climate Change and Net Zero Secretary used the opportunity to call for a windfall tax.

"As millions of families struggle with their energy bills, the fact that Shell recorded the second highest quarterly profits in the company's history is further proof that we need a proper windfall tax to make the energy companies pay their fair share," he said.

"Rishi Sunak's existing plans are a pale imitation of Labour's windfall tax, and would see billions of pounds of taxpayer money go back into the pockets of oil and gas giants through ludicrous tax breaks."

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