As oil prices drop...

Shell profits double but fall from record high

Shell has seen an easing of profits

Shell posted third quarter profits of $9.45 billion, slightly above forecast, and more than double the $4.2bn reported in the same period last year.

However, in line with Shell’s forecast earlier this month of lower profits, the latest figure represents an easing from the previous quarter’s record high of $11.5bn because of weaker refining and gas trading.

While the latest earnings will ramp up Opposition pressure for another windfall tax, wholesale oil prices have dropped from highs of $120 a barrel in June to around $95.

Shell’s chief executive Ben van Beurden said: “We are delivering robust results at a time of ongoing volatility in global energy markets.

“We continue to strengthen Shell’s portfolio through disciplined investment and transform the company for a low-carbon future. At the same time we are working closely with governments and customers to address their short and long-term energy needs.”

Shell has announced plans to boost its dividend later in the year and has extended its share repurchasing programme with plans to buy back $4 billion of stock over the next three months.

BP, Chevron, Exxon Mobil, and Saudi Aramco will publish their own updates in the coming days.

Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “Shell’s earnings have eased this quarter, on the back of a more volatile trading environment compared to Q2.

“However, supported by strong cashflow, the company is continuing to reward shareholders with an expected 15% hike to the dividend for the fourth quarter and another share buyback programme worth $4 billion.

“While that is obviously good news for shareholders for now, it may well raise a few eyebrows in the current macro-economic circumstances.”

AJ Bell head of investment analysis, Laith Khalaf, said: “Given it now plans to reward shareholders with a windfall of their own through its pledge to increase the fourth quarter dividend, calls for a further levy on Shell’s bumper profits are only likely to increase.

“In fairness, chief executive Ben van Beurden has been self-aware enough to acknowledge this fact and he could argue he has to reward shareholders who, after all, saw the first cut in the dividend since the Second World War during the pandemic.

“The optics of paying out more to investors aren’t too clever when many households are really struggling with their energy bills.

“Shell isn’t making as much money as it was in the second quarter when it posted record figures, though the company’s new habit of trailing its numbers a week or so early means there’s nothing here to really alarm investors.

“The oil and gas industry tends to be highly cyclical and things may not be as good again for Shell as they were in 2022 for some time. Oil prices are coming under some pressure as the economy slows and gas prices in Europe have fallen as storage levels increase – though whether this will last once winter really hits is open to question.”

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