Shell: 2022 was a tumultuous year as inflation and recessionary fears had industries in a chokehold.
Despite the difficulties, some brands were able to profit well, including Shell.
It was a good year for the oil company as they generated a sizable revenue, with stocks showing life as well.
The news
According to reports, Shell made a record profit last year, generating almost $40 billion.
The numbers are more than double what it managed in 2021, following the soaring oil and gas prices from the Russia-Ukraine war.
On Thursday, Europe’s largest oil company reported adjusted full-year earnings of around $39.9 billion, a significant step up from the $19.3 billion posted in 2021.
The record profit comes from a strong performance in the gas industry.
By midday, stocks were up by 2.6% in London.
In addition, over 40% of Shell’s full-year earnings were generated from the company’s integrated gas business, including liquified natural gas trading operations.
Almost two-thirds of the $9.8 billion profit came from the unit in the final three months of 2022.
Wael Sawan, the CEO of Shell, said the results showcase the company’s differentiated portfolio strength.
Additionally, it demonstrates their capacity to deliver vital energy to customers amid a volatile time.
Other players
Shell’s success is the latest among record-setting results from the world’s largest energy companies.
Each business has enjoyed profits due to soaring oil and gas prices.
This week, ExxonMobil posted record earnings of $59.1 billion for the full year.
Meanwhile, Chevron reported a record profit of $36.5 billion last month.
The profits have led to renewed calls for higher taxation.
European Union governments and the United Kingdom have already imposed windfall taxes on oil company revenues.
The proceeds will then be streamed to aid struggling households amid rising energy bills.
According to Shell, the company expects an additional $2.3 billion tax charge in 2022 connected to the EU windfall tax and UK energy profits levy.
Last year, the oil giants paid $13.1 billion in tax globally.
Shares & buybacks
Shell recently announced another $4 billion share buyback program with expected completion by May.
The company confirmed it would raise the dividend per share by 15% for the fourth quarter of 2023.
In 2022, the company retired $26 billion to shareholders via buybacks and dividend payments.
Sinead Gorman, the chief financial officer of Shell, told reporters on Thursday that the company spent around $21 billion on low- or zero-carbon businesses last year, which is over one-third of total expenditure.
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With the spending, they invested $4 billion into the Renewables and Energy Solutions business, which includes the following:
- Electricity generation
- Hydrogen production
- Carbon capture and storage
- Carbon credits trading
The Renewables and Energy Solutions unit generated less than 5% of the group’s profits last year.
As a result, it highlights the gravity of Shell’s challenge as it tries to move from oil and gas and focus on lower-carbon energy.
Criticism
While Shell is taking the initiative to adopt lower-carbon energy, climate activists criticized the company on Thursday, calling them out for not moving quickly enough.
Mark van Ball – the founder of Follow This, a shareholder activist group – released a statement, saying:
“Shell can’t claim to be in transition as long as investments in fossil fuels dwarf investments in renewables.”
“The bulk of Shell’s investments remain tied to fossil fuel businesses because the company doesn’t have a target to slash its total CO2 emissions this decade.”
Investments
In 2022, the company invested over $12.4 billion into the integrated gas and oil exploration units.
Sawan said he believed Shell was finding the balance in its capital allocation regarding investment into renewable energy.
He said the company was on track to cut emissions by half from its operations by 2030 compared with levels from 2016.
90% of the company’s emissions come from customers using its products.
Shell plans to reduce the “scope 3” emissions by 20% by 2030.
In addition, the company is working to become a net-zero emissions company by 2050.
Another protest
This week, Greenpeace activists will stage a protest on a Shell-contracted ship across the Atlantic with equipment.
The equipment will redevelop the Penguins’ oil and gas field in the North Sea.
The group released a statement explaining that the protest strives to highlight the worldwide climate devastation brought on by Shell.
A Shell spokesperson released a statement to address the activists who boarded the vessel in rough conditions, creating safety concerns.
“Projects like Penguins… help reduce the UK’s reliance on higher carbon and costlier energy imports,” said the spokesperson.
“Locally-produced, responsible oil and gas production is critical for UK energy security and entirely consistent with a net zero pathway.”
Image source: CNBC
