Shell and TotalEnergies profits cut in half by lower oil prices / CNN Business

London
CNN
—

Shell and TotalEnergies have reported a steep drop in second-quarter profits after oil and gas prices fell from record levels reached after Russia’s full-scale invasion of Ukraine 17 months ago.

The sharp drop in profits from two of the world’s largest oil companies signals the end of a series of record results for energy companies.

Shell, Europe’s largest oil company by revenue, reported adjusted profits of $ 5.1 billion during April-June the period-less than half of the $ 11.5 billion it reported a year ago. The result was also driven by lower production volumes and lower margins in its oil refining business, Shell said in a statement on Thursday. The company’s shares fell 2% in London.

French oil company Total

Energy posted adjusted net income of $ 5 billion on Thursday, a 49% drop on the same period a year ago.

Energy companies enjoyed bumper profits last year on the back of high oil and gas prices, and shareholders were rewarded dearly.

Payments from dividends and share buybacks in the five largest Western energy firms-BP

(BP), Chevron

(CVX), ExxonMobil, Shell and TotalEnergies — surpassed $ 100 billion in 2022.

Prices for European natural gas and Brent crude oil, the global oil benchmark, are now lower than they were before the start of Ukraine’s war in February 2022, meaning shareholders may not enjoy the same unexpected profit as last year.

While TotalEnergies kept its share buybacks for the quarter unchanged from a year earlier at $ 2 billion, Shell said it would buy back shares worth $ 3 billion — 50% less over the same period last year. The company increased its quarterly dividend by 15% to 33 cents per share.

Shell added that, subject to board approval, it would distribute “at least” another $ 2.5 billion through share buybacks following its third-quarter results. That’s down from $ 4 billion for last year’s third quarter.

“Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment,” said the company’s CEO.

Speaking to reporters, he also said Europe was heading into winter “in a good place,” given rising renewable energy generation and natural gas storage levels approaching historic levels.

According to Sasiblan, Shell is on track to cut planet-heating carbon emissions from its own operations in half by 2030, compared with 2016 levels.

But the company continues to steer more toward oil and gas production than renewables — part of a broader shift among energy companies back to fossil fuels, driven by last year’s price jump and rising demand for energy.

In the first half of the year, Shell invested $ 3.9 billion in oil and natural gas exploration and production. That’s down from $ 4.6 billion a year ago, but significantly ahead of the $ 996 million it invested in its renewable resources and Energy Solutions business, which includes electricity generation, hydrogen production, carbon capture and storage, and carbon credit trading.

Separately, the International Energy Agency said in a report on Thursday that global coal consumption in 2023 would remain near the record level hit last year, as continued strong demand growth in Asian economies exceeds declines in Europe and North America.

Chevron and ExxonMobil will report the results on Friday, with BP reporting next Tuesday.