- Shell increased shareholder returns
- Profit growth from higher prices
- Environmental concerns persist
This year, the company increased shareholder returns to $23 billion in response to higher crude prices, similar to rival BP.
Shell has faced criticism following the disclosure of an augmentation in shareholder incentives, which was attributed to an upsurge in quarterly earnings.
Financial Performance and Profits
Currently the most valuable component of the FTSE 100 share index, the oil and gas giant reported adjusted profits of $6.2 billion (£5.1 billion) for the three months ending in September.
That was an increase from the $5 billion it reported for the second quarter of its fiscal year but a decrease from the $9.45 billion it earned during the same period last year, a period during which petrol and oil prices were inflated due to the immediate consequences of Russia’s invasion of Ukraine.
The profits were consistent with the expectations of the market.
Factors Behind Profit Growth
Shell ascribed its profit growth to increased oil prices, bolstered refining margins, and robust liquefied natural gas (LNG) trading.
The latter has benefited from the ongoing dearth of Russian natural gas supply to the market.
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Since late June, there has been a significant increase in oil prices, as Brent crude surged from slightly above $70 to nearly $100 at one point due to production reductions by key oil-producing countries, including Russia and Saudi Arabia.
The Israel-Hamas conflict has increased volatility, despite the price being $85 on Thursday.
Shell declared that in addition to retaining its dividend per share at $0.331, it would repurchase shares to increase its award pool.
They would tally $3.5 billion over the next three months, according to the company.
It completed a buyback of $2.7 billion over the preceding three months.
Shell stated that its most recent declaration would bring its total distributions for 2023 to $23 billion (£18.9 billion).
1.5% more shares were traded at the open.
“Shell delivered another quarter of strong financial and operational performance, seizing opportunities in volatile commodity markets,” said CEO Wael Sawan.
“We continue to simplify our portfolio while delivering more value with fewer emissions,” according to him.
Like its UK rival BP, Shell’s profit statistics were criticised this week.
Challenges and Environmental Concerns
Major players in the oil and gas industry continue to be subject to pressure from consumer groups and climate activists who accuse them of moving too slowly to achieve net-zero emissions while households endure another consecutive winter with higher energy bills.
Senior campaigner for climate justice organization Global Witness, Jonathan Noronha-Gant, commented on the performance as follows: “Shell’s shareholders continue to be among the greatest beneficiaries of Russia’s heinous invasion of Ukraine and ongoing global instability.
Shell is able to generate enormous profits due to the volatility of the fossil fuel markets, but the company has doubled down on oil, gas, and shareholder payouts rather than investing in renewable energy.
