Shell capped off a highly lucrative year of trading with bumper fourth quarter earnings of £7.9bn ($9.8bn) – powered by booming liquefied natural gas (LNG) sales.
The hefty returns has helped power the energy giant to record profits in 2022 – with Shell unveiling £32.2bn ($39.9bn) in full year earnings, more than double last year’s total.
Following the strong headline results, the London-listed firm has announced a fresh share buyback programme of £3.2bn ($4bn).
This is expected to be completed by the first quarter 2023 results announcement in three months time.
Shell has also confirmed the $18.4 billion share buyback programme for 2022 was completed.
Total shareholder distributions in the fourth quarter of trading last year amounted to £5.1bn ($6.3bn).
This included £1.5bn ($1.8bn) in dividends and £3.6bn ($4.5bn) in buybacks.
Shell sustains profits as oil and gas prices fall
In 2022, Shell paid over six per cent of all FTSE 100 dividends – reflecting the historic period of trading for fossil fuel producers amid soaring oil and gas prices following Russia’s invasion of Ukraine.
Soaring oil and gas prices powered profits over the first three quarters, with Shell cashing in on the LNG boom to prop up its earnings when wholesale costs began to slide.
Money has continued to pour into the energy giant, with cash flow from operations increasing by £8bn ($9.9bn) in the third quarter to £18.1bn ($22.4bn) in 2022.
Net debt marginally decreased by £2.8bn ($3.5bn) from £39bn ($48.3bn) in the third quarter, to £36.2bn ($44.8bn) in the fourth quarter.
Despite the levy, Shell has bolstered its portfolio with acquisitions of renewable natural gas producer Nature Energy, winning the wind tender for Hollandse Kust VI as part of the Ecowende joint venture and further simplifying the portfolio with the merger of Shell Midstream Partners in the US.
Shell’s newly hired chief executive Wael Sawan said: “Our results in the fourth quarter and across the full year demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.
“We believe that Shell is well positioned to be the trusted partner through the energy transition. As we continue to put our powering progress strategy into action, we will build on our core strengths, further simplify the organisation and focus on performance.”
Shell sours on UK market as windfall tax bites
The powering progress strategy was recently used to justify its decision to review its household supplier business – amid growing expectations it will offload the retail division, which is home to 1.4m customers.
In its results, Shell also confirmed its first $1.5bn ($1.9bn) charge relating to windfall taxes in the UK and EU.
The energy giant appears to be reviewing its plans in the UK market.
A spokesperson from the energy giant confirmed to City A.M. earlier this month that Shell is now factoring the hiked windfall tax unveiled by Chancellor Jeremy Hunt into its decision making.
It would be assessing all future projects on a “case-by-case basis.”
Last year, Shell committed £25bn to domestic energy projects over the current decade, with three quarters of the expenditure focused on low and zero carbon projects.
However, just £2.8bn ($3.5bn) of the £20bn ($24.8bn) Shell invested across 2022 was funnelled into its renewables division.
Total recently pulled out of £100m investment plans in the UK, concerned over the unfavourable investment climate.