LONDON – Shell on Thursday posted a first-quarter net profit of US$9.65 billion (S$12.8 billion), topping analysts’ forecasts, as strong earnings from fuel trading and higher liquefied natural gas (LNG) sales offset cooling oil and gas prices.
The stronger-than-expected profits followed a string of forecast-beating results from rivals including BP and ExxonMobil as the sector continues to benefit from strong demand and price volatility. Norwegian rival Equinor on Thursday also posted higher-than-expected quarterly profits.
Lower natural gas prices in the quarter weighed on Shell’s giant integrated gas business, with profits slumping 18 per cent in the quarter to US$4.9 billion. But this was broadly offset by a 139 per cent jump in profit to US$1.8 billion in its chemicals and refined products unit.
Shell, the world’s top LNG trader, said LNG production rose in the quarter, thanks to higher uptime at its Prelude floating facility off the coast of Australia.
Shell kept its dividend unchanged at 28.75 US cents per share and also kept the rate of its share-repurchase programme stable at US$4 billion over the next three months, even as its cash generation fell in the quarter. It bought back US$19 billion in shares in the year to February 2023, nearly double the total in pre-pandemic 2019.
Shell’s reported adjusted earnings of US$9.65 billion in the first quarter exceeded a company-provided analyst forecast of US$8 billion. Its shares rose 2.5 per cent in early London trading. That compared with earnings of US$9.1 billion a year earlier and US$9.8 billion in the fourth quarter of 2022, when Shell reported a record annual profit of $40 billion.
Shell showed “strong operational performance in the quarter across all divisions, with oil and gas trading playing a key role”, Jefferies analyst Giacomo Romeo said in a note.
The British company maintained its 2023 capital spending plans unchanged in a range between US$23 billion and US$27 billion.
Shell chief executive Wael Sawan has introduced a new management structure since taking office in January, including placing its renewables and low-carbon operations under the downstream division. REUTERS
