Shell boosted its underlying profit and cash flows in the first quarter of 2022, thanks to higher oil and gas prices and strong trading, the company said today.
Shell's profit, excluding inventory effects, was $5.03bn, a 16pc improvement from a year earlier but less than half the $11.08bn it generated in the final quarter of 2021. The firm took $4.24bn of impairment charges related to its intention to withdraw from Russian oil and gas activities, including its involvement in the Nord Stream 2 pipeline project, its ventures with state-controlled Gazprom and its service station and lubricants operation in the country.
Shell's adjusted earnings for the quarter was $9.13bn, well beating analysts' consensus estimate of $8.12bn. There was strong trading in LNG and in refining and chemicals during the quarter, new chief financial officer Sinead Gorman said.
The company's cash flow from operations jumped by 81pc from the preceding quarter to $14.8bn, which it said reflected favourable derivatives movements caused by settlement of contracts during the quarter. Shell reduced its net debt by $4.1bn during the three months to $48.5bn, bringing its gearing down to 21.3pc from 23.1pc.
Shell's first-quarter production, at 2.96mn b/d of oil equivalent (boe/d), was substantially down from 3.14mn boe/d in the prior quarter and 3.49mn boe/d in the first quarter of 2021. Maintenance within the company's Integrated Gas segment, including at Prelude FLNG off western Australia and a planned turnaround at one of the trains at Pearl GTL in Qatar, was responsible for a drop in output from that business to 896,000 boe/d from 978,000 boe/d in the fourth quarter.
The company's Upstream production fell by 4pc from the prior quarter to 2.03mn boe/d, partly because of its sale of its Permian Basin business to ConocoPhillips.
For the current quarter, Shell expects to deliver Integrated Gas production of 910,000-960,000 boe/d and Upstream production of 1.75mn-1.95mn boe/d.
In its downstream Chemicals & Products segment, the indicative refining margin increased to $10/bl from $7/bl in the immediately preceding quarter, with refinery utilisation at 71pc compared with 68pc. This was mainly down to fewer turnarounds and lower levels of unplanned maintenance, but Shell expects refinery and chemical plant utilisation to be hit by scheduled turnarounds and maintenance in the current quarter.
Within Shell's new Renewables and Energy Solutions reporting segment, the company sold 314 TWh of power and pipeline gas to customers in the quarter, compared with 308 TWh in the fourth quarter of 2021. Shell reduced the segment's operating cash flow loss to $459mn from $5.24bn over that time, and this business won bids for 6.5 GW of offshore wind power generation in the UK and the US during the quarter. It recently agreed to buy Indian renewable power company Sprng Energy Group.
Shell said it had bought back $4bn of its shares during the quarter, almost half the $8.5bn it plans to acquire as part of its first-half share buyback programme. As flagged by the company in its previous set of results, Shell raised its first-quarter dividend by 4pc to 25¢ per share.
