Major oil and gas firm Shell (SHEL) followed in the footsteps of its close peer BP (BP.) in reporting a better-than-expected set of first quarter results.
The $9.1 billion of underlying profit, more than $1 billion ahead of forecasts and nearly three times the amount it made this time last year, is only adding to the clamour for a windfall tax.
The big driver for the increase in profit has been commodity prices inflated by the war in Ukraine and energy and fuel costs for consumers are soaring.
Shell did report a $3.9 billion non-cash charge associated with its decision to exit Russia, a lot less than BP’s hit which reflects its smaller existing footprint in the pariah nation.
BIG SHAREHOLDER RETURNS
Shell raised its first quarter dividend by 47% to $0.25 per share from $0.17 a year ago and by 4% quarter-on-quarter. It also indicated it would be likely to engage in another round of share buybacks with returns to shareholders guided to exceed 30% of second half cash flow.
Net debt was down from $52.6 billion at the end of 2021 to $48.5 billion as at the end of March.
Equity research analyst at Quilter Cheviot Jamie Maddock commented:
‘Even once inflation washes out of the system and commodities calm down once again, the future remains bright for Shell. Recent events have shown the need for energy security for individual nations and as such oil and gas pipes are unlikely to be turned off for good anytime soon.
‘As a result, while it continues to invest in the energy transition and makes that a priority for future proofing the business, energy concerns will mean the company can benefit from both old and new world energy resources.’
