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FTSE 100: Shell profits double to $9.5bn on higher oil and gas prices

FTSE 100: Shell profits double to $9.5bn on higher oil and gas prices

 

Shell announced a $4bn (£3.4bn) share buyback programme as cooling oil prices failed to take the shine of the energy company's bumper profits.

The FTSE 100 (^FTSE) firm reported a "robust performance in a turbulent economic environment" with lower crude prices and higher gas prices compared with the second quarter this year.

Shell's adjusted earnings figure of $9.5bn was more than double compared to the $4.13bn it recorded a year ago, but down 18% on the the second quarter.

Europe's largest energy group beat the average analyst estimate of $9bn after cashing in on selling expensive gas in the third quarter of the year, offsetting part of the fall in oil prices.

Thursday's results were the second highest quarterly profits in the company’s history.

It will increase its dividend by 15% and buy back a further $4bn of shares as it reported another set of bumper profits driven by sustained high prices for its oil and gas products.

The payment will be made in March 2023, subject to board approval, the company said. The additional buybacks will increase total share purchases for the year to $18.5bn, taking announced shareholder distributions for this year to around $26bn, it said.

"We are delivering robust results at a time of ongoing volatility in global energy markets," chief executive Ben van Beurden said.

"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."

Company shares were up 0.4% in pre-market trade on Thursday in London.

Shell faces a potential windfall tax on profits on top of the 65% tax on their UK profits, and outgoing CEO Ben van Beurden has suggested governments should tax energy firms to help the poorest people deal with soaring bills.

A separate report, published on Thursday suggests that a windfall tax on share buyback profit transferred by Shell and rival BP (BP.L) to shareholders could raise £4.8bn ($5.6bn) a year.

The funds could help tackle rampant inflation and households as the cost of living surging, according to thinks tanks Institute for Public Policy Research (IPPR) and Common Wealth.

Joseph Evans, researcher at IPPR, said: "Some companies have been channelling record profits to their shareholders. It would be only fair, during this cost of living crisis, to implement a modest tax on dividends and buybacks to give the government increased revenue to fund our public services.

"The introduction of such a tax would also encourage companies to change their behaviour: instead of taking money out of their business and handing it to shareholders, they might consider investing in the future to grow the economy, or reduce prices for customers to help tackle inflation."

Read the latest issue of the OGV Energy magazine HERE

Published: 27-10-2022

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