Shell reported that its second quarter profit more than doubled from a year earlier, beating analysts’ expectations as higher oil and gas prices, stronger trading performance and increased market volatility during the Middle East conflict boosted earnings.
The British energy major on Thursday posted adjusted earnings of $9.84 billion for the second quarter, compared with $4.26 billion in the same period last year. The result exceeded analysts’ consensus forecast of $8.92 billion.
Shell said higher crude oil and natural gas prices, stronger liquefied natural gas (LNG) and oil trading, as well as improved chemicals margins, helped offset lower sales volumes caused by disruptions to its operations in Qatar.
The company said it benefited from heightened market volatility linked to the conflict involving the United States, Israel and Iran, which created additional trading opportunities for major energy companies with large commodity trading businesses.
Shell’s refineries operated at 102% of nameplate capacity during the quarter to take advantage of strong fuel demand and prices, contributing to a 20% increase in jet fuel production compared with a year earlier.
Shares in Shell rose about 1.6% in early trading, outperforming the broader European energy sector.
The company’s second quarter earnings were its second highest on record, surpassed only by the second quarter of 2022, when Russia’s invasion of Ukraine disrupted global energy markets.
Shell also reported its strongest operating cash flow since 2022, including working capital movements, while maintaining its planned $3 billion share buyback programme for the next three months.
Its integrated gas division, which includes one of the world’s largest LNG trading operations, generated $2.7 billion in profit, up 55% from a year earlier despite lower production.
The chemicals and products division reported earnings of $2.3 billion, compared with $118 million in the same quarter last year, marking its strongest quarterly performance since 2021.
Looking ahead, Shell forecast third quarter integrated gas production of 570,000 to 630,000 barrels of oil equivalent per day, while upstream production is expected to range between 1.68 million and 1.88 million barrels of oil equivalent per day, reflecting planned maintenance activities.
Production at Shell’s Pearl gas to liquids plant in Qatar has remained constrained since one of its processing trains was damaged in an attack in March. The company said repairs are expected to take about a year, with increased output from operations in Canada, Nigeria and Australia helping to offset lost production.
Shell said its net debt fell to $41.8 billion at the end of the quarter, down from $52.6 billion in the previous quarter, while its gearing ratio declined to 18.7% from 23.2%.
The company noted that Brent crude averaged about $97 per barrel during the quarter, while benchmark European natural gas prices averaged approximately €46 per megawatt hour, both significantly higher than a year earlier. Reuters
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