Shell PLC on Thursday reported higher-than-expected profits for the first quarter of 2022, although the bottom-line result was hit by $3.9 billion of charges related to its exit from Russia.
The U.K. energy giant generated adjusted earnings of $9.13 billion in the first quarter, up from $6.39 billion in the fourth quarter. This was above the market consensus of $8.67 billion, provided by Vara Research and averaged from 25 analysts.
Shell’s SHEL,
Despite reporting higher earnings, net profit fell to $7.12 billion from $11.46 billion as the company booked post-tax charges of $3.9 billion related to the phased withdrawal from Russian oil and gas operations.
These charges included a $1.61 billion impairment related to the Sakhalin-2 oil and LNG project with Gazprom PJSC and a $1.13 billion write-down related to a loan for the Nord Stream 2 gas pipeline.
Cash flow from operations rose by 81% to $14.82 billion in the first quarter, and net debt was reduced to $48.49 billion from $52.56 billion.
Shell declared a dividend of $0.25 a share for the period, up from $0.24 in the fourth quarter of 2021, and said shareholder distributions in the second half will be in excess of 30% of operating cashflow.
The company confirmed that it will complete the $8.5 billion buyback program for the first half by the announcement of the second quarter results.
Looking forward, Shell said production from its Integrated Gas division will rise to 910,000-960,000 oil-equivalent barrels a day in the second quarter, although LNG volumes will fall to 7.4 million-8.0 million metric tons due to the derecognition of Sakhalin-related output.
Upstream production is expected to drop to 1.75 million-1.95 million barrels a day due to lower seasonal demand and increased scheduled maintenance. Marketing sales volumes are seen at 2.30 million-2.80 million barrels a day, compared with 2.37 million in the first quarter.
In addition, Shell expects chemicals sales volumes of 3.10 million -3.50 million tons in the second quarter, with refinery utilization falling to 65%-73% and chemicals plant utilization declining to 69%-77% due to scheduled turanrounds and maintenance.
Shares at 0702 GMT were up 2.3% at 2,276 pence.
Write to Jaime Llinares Taboada at [email protected]; @JaimeLlinaresT
