Oil giant Shell ups share buyback scheme after posting profits of $36.9bn

Oil giant Shell has marked a second quarter of record financial results by rapdily accelerating its share buyback programme.

The London-listed supermajor has upped its share repurchases by $6 billion, with an expected completion date of the end of September.

And based on the “current energy sector outlook”, Shell (LON: SHEL) expects shareholder distributions to remain in excess of 30% of cash flow from operations (CFFO).

This latest announcement builds on the $8.5bn share buyback scheme it announced earlier this year.

In its first-half results, published on Thursday, the oil giant reported eye-watering pre-tax profits of $36.9bn.

That is a figure around three times greater than the equivalent period in 2021, when Shell posted profits of $12.3bn.

Revenue for the first half of the year stood at $184bn, up from $116bn last year, while adjusted earnings topped $20bn.

It means Shell has smashed its previous best ever quarterly results, set just three months ago, after a period of “strong performance” in “turbulent” economic times.

© Bloomberg

Big Oil is expected to rake in record profits this quarter as high energy prices, sparked by Russia’s invasion of Ukraine, continue to dog global economies.

Shell chief executive, Ben van Beurden said: “Crucially, our Powering Progress strategy is delivering strong results for our shareholders on the back of years of portfolio high grading, combined with robust operational performance.

“We are increasing shareholder distributions through a $6 billion share buyback programme which is expected to be completed by Q3 2022 results.”

At Shell, we continue to invest in the energy supplies the world needs today.

At the same time, we are reducing our own emissions and making significant investments in low-carbon energy. More: https://t.co/WOjFb5fPaR #ShellResults pic.twitter.com/S1SmPSFqgk

— Shell (@Shell) July 28, 2022

In the first half of 2022, Shell shareholder distributions have doubled from those in the first half of 2013, when Brent crude prices were similar.

The oil giant has put the “better results” down to increased discipline, integrated value delivery and improved resilience.

On top of the share buybacks, Shell has also announced a second quarter interim dividend $0.25 per ordinary share.

Oil and gas prices have reached highs not seen in years in recent months following Russia’s attack on Ukraine.

As well as fuelling global inflation, high energy costs are a key part of the cost-of-living crisis currently gripping the UK and earlier this year the UK Government hit North Sea producers with a windfall tax on their profits.

Ministers are also pushing companies to splash the cash on new oil and gas projects in order to increase supplies.

Just this week Shell pushed the investment green light on two North Sea gas fields, Jackdaw and Selene – the latter is in partnership with Deltic Energy.

© Shell

That is in addition to the Pierce redevelopment project, about 165 miles east of Aberdeen, which is due to start up imminently.

Shell says its actions are “strengthening” UK energy security.

Mr van Beurden added: “With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike.

“Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future.”