LONDON: Shell again boosted its dividend and share repurchases on Thursday after fourth quarter profits hit their highest in eight years, fuelled by higher oil and gas prices and strong gas trading performance.
The strong results cap a dramatic recovery in 2021 for Shell and the oil and gas sector after energy demand and prices collapsed in 2020 in the wake of the COVID-19 pandemic.
Shell shares were up 0.7% by 1448 GMT, compared with a 0.5% decline for the broader European energy index. Shell, which moved its headquarters from The Hague to London last month, said it expected to lift its dividend by 4% in the first quarter of 2022 to $0.25 per share, which would be the fourth rise since Shell cut its dividend in early 2020 for the first time since the 1940s.
The company also said it would buy back $8.5 billion worth of shares in the first half of 2022, including $5.5 billion from the sale of its Permian shale assets in the United States. That compares with share buybacks totalling $3.5 billion in 2021.
“2021 was a momentous year for Shell,” Chief Executive Ben van Beurden said in a statement.
Shell’s results came on the day British regulators hiked energy prices by 54% in response to higher power prices, prompting calls to levy a tax on oil and gas producers. Natural gas and electricity prices around the world have soared since the middle of last year on tight gas supplies and higher demand as economies rebounded from the COVID-19 pandemic.
Benchmark European gas prices and Asian LNG prices hit all-time highs in the fourth quarter. Shell, the largest trader of liquefied natural gas (LNG), said its integrated gas earnings were boosted by “significantly higher” profits from trading.
Trading helped offset an 11% fall in LNG sales and a 7% drop in LNG production in 2021 as a result of plant maintenance and unplanned outages, including at its flagship Prelude floating LNG plant in Australia.
Prelude would stay shut for the first three months of 2022, van Beurden told reporters, adding that Shell would help supply Europe with gas in case of Russian disruptions.
HIGHER SPENDING
U.S. rival Exxon Mobil on Tuesday reported its largest profit in seven years, while Chevron’s profit missed estimates. BP, TotalEnergies and Equinor report results next week.