Shell’s earnings plunge on lower oil and gas prices

Shell’s second-quarter adjusted earnings nearly halved from the first quarter and fell by more than 50% from the record profits for the same period last year. The company missed analyst forecasts as lower oil and gas prices, refining margins, and LNG trading impacted the supermajor’s performance in Q2.

Shell’s adjusted earnings, the metric most closely watched by analysts, slipped to $5.1 billion for the second quarter, down from $9.6 billion profits for the first quarter and from the $11.472 billion profit for the second quarter of 2022.

The earnings for the April-June 2023 quarter missed analyst estimates of $6 billion.

The drop in profits in the latest quarter wasn’t unexpected, considering that oil prices averaged $75 per barrel in Q2 2023, compared to $113 a barrel in the same quarter last year, and natural gas prices were a fraction of the records seen in the summer of 2022.

Shell itself has also flagged a significantly lower contribution from its gas trading division in the second quarter of 2023.

Earlier this month, Shell said it expects its gas trading business to have been significantly lower in the second quarter, compared to a strong first quarter, due to seasonality and fewer optimization opportunities.

Trading helped Shell and other majors active in the gas trading business to post record earnings for 2022 amid natural gas price spikes and the overall extreme market volatility in energy commodities.

As pledged in June, Shell is raising its quarterly dividend by 15% $0.331 per share and will begin a $3 billion buyback program for the next three months, CEO Wael Sawan said today. Subject to board approval, Shell will also launch at least $2.5 billion in additional buybacks at the Q3 2023 results, the executive noted.

Earlier this week, Norway’s energy giant Equinor reported 57% lower adjusted earnings for the second quarter compared to the same period of 2022 as oil and natural gas prices slumped. Equinor’s adjusted earnings of $7.54 billion were in line with a $7.6 billion consensus estimate provided by 21 analysts to Equinor.