Shell recorded a $40bn profit in 2022 as higher oil and gas prices caused by Russian aggression in Ukraine drove profits to the highest level for 115 years.
Adjusted earnings for 2022 rose to $39.9bn from $19.2bn in 2021 as earnings across their integrated gas, upstream, and chemical and products business units soared.
Fourth quarter results showed the impact of higher oil and gas prices was heavily weighted to the summer months and earnings from their upstream production activities fell sharply in the last quarter of the year. Adjusted earnings for the fourth quarter fell to $3bn from $5.9bn in the third quarter as energy prices fell.
Integrated gas was the standout performer in the fourth quarter with adjusted earnings rising 157% to $5.9bn.
Shell shares were 1.9% higher at 1.9% at the time of writing.
“Despite lower oil and gas prices over the final quarter of 2022, Shell’s adjusted earnings rose to $9.8m from $9.4m in the previous quarter, with higher LNG trading and optimisation results,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Total earnings for 2022 of $39.9m came in ahead of analyst expectations. This gave Shell the confidence to increase its final dividend by 15% and earmark $4bn for share buyback in the first quarter of 2023.”
Nathan also touched on how Shell is increasingly banging their renewables drum. Shell’s renewables unit recorded $1.7bn adjusted earnings in 2022 and marked a swing to profits from a $243m loss in 2021. Renewables earnings is still relatively insignificant compared to Shell’s overall profit, but the profit certainly signals Shell’s future intentions.
“Shell was keen to point out its expansion in renewables, such as the recent acquisition of biogas producer Nature Energy and its JV with Ecowende which has won a bid to develop a 760 MW offshore wind farm in the Netherlands. This comes against the backdrop of a complaint to the SEC by activist Group Global Witness, that Shell is overplaying its investments in renewables,” Nathan said.