Shell’s profits boom as high oil prices drive up earnings
Shell reported soaring profits yesterday, powered by hefty revenues from shipping liquefied natural gas (LNG) amid tightening markets and rebounding demand.
The oil and gas giant raked in $19.3bn in earnings for 2021, quadrupling last year’s $4.85bn total.
The most recent three-month window was its strongest in eight years, with $6.4bn reported in earnings, while also completing $1.7bn of planned share buybacks.
It has now announced a further $8.5bn share buyback scheme for the first half of 2022, including $5.5bn from its sale of Permian Basin fossil fuel assets to ConocoPhillips last year.
Chief executive Ben van Beurden said: “We delivered very strong financial performance in 2021, and our financial strength and discipline underpin the transformation of our company.”
The results are its first reported quarterly performance since it left the Netherlands and moved its headquarters to London, while ditching its dual share structure and iconic “Royal Dutch” name.
Shell found itself consistently at loggerheads with Dutch authorities over taxes and environmental targets.
Analysts have been roundly impressed with the latest figures, with Neil Shah, director of research at Edison Group, praising the group’s recovery from the pandemic.
He said: “Shell’s impressive upswing in the fourth quarter improves on expectations, as the oil giant profited from increased commodity prices and healthy levels of mobility in 2021, despite various global pandemic restrictions throughout the year. The windfall in earnings has also allowed Shell to purge a substantial amount of borrowing accrued during the pandemic, reducing its net debt by $23bn from 2020 levels.”
Meanwhile, UBS has maintained its buy stance towards the company in its latest update, noting Shell’s fourth quarter earnings were 22 per cent above the consensus expectations of $5.2bn.