The Shell logo is seen outside a petroleum station in Radstock, Somerset, England, on February 17, 2024.
Matt Cardy | Getty Images News | Getty Images
British oil giant Shell on Thursday reported higher-than-expected second-quarter profit despite lower refining margins and weaker liquefied natural gas trading.
The oil and gas giant reported adjusted profit of $6.3 billion for the three-month period to the top of June, beating analysts’ expectations of $5.9 billion, in accordance with LSEG estimates.
Shell’s second-quarter earnings fell 19% in comparison with the primary three months of the yr. The company reported adjusted earnings of $7.7 billion in the primary quarter of 2024.
Shell announced that it might launch a share buyback program value $3.5 billion over the subsequent three months, an identical volume to the previous quarter. The company’s dividend will remain unchanged at 34 cents per share.
“We are in a good position and we believe we have good momentum, but there is still a lot of work to do,” Shell CEO Wael Sawan told CNBC’s “Squawk Box Europe” on Thursday.
Asked how far Shell was on its journey to becoming a more disciplined and values-focused company, Sawan replied: “We are halfway there. We had talked about a 10-quarter sprint. Right now, we are literally at the beginning of the fifth quarter and we are making great progress.”
Sawan cited “significant improvements” in areas akin to costs, capital discipline and operating performance.
Shell’s CEO said the corporate has implemented $1.7 billion value of structural cost cuts since 2022 and pointed to the corporate’s goal of cutting costs by $2 billion to $3 billion by the top of next yr.
The company’s London-listed shares rose 1.4 percent on Thursday morning. Shell’s share price has risen greater than 11 percent thus far this yr, outperforming European rivals.
British rival BP increased its dividend and prolonged its share buyback program on Tuesday on account of better-than-expected earnings. US oil giants Exxon Mobil and Chevron will each report their second-quarter results on Friday.
“The eternal question”
Shell recently warned that the corporate expects an impairment of as much as $2 billion following the sale of its refinery in Singapore and the suspension of construction work at its plant in Rotterdam, the Netherlands.
Sleeve confirmed In early May, the corporate announced that it had agreed to sell its refining and petrochemical assets in Singapore to a three way partnership between Indonesian petrochemical company PT Chandra Asri and Swiss trading house Glencore.
The transaction, which is predicted to be accomplished by the top of the yr, was viewed as a part of Sawan’s plans to cut back Shell’s carbon footprint and give attention to its most profitable businesses.
John Moore, senior investment manager at RBC Brewin Dolphin, called Shell’s second-quarter results “robust” and said they “underscore why the market is generally optimistic about the company’s prospects.”
“Shell has shown its commitment to oil and gas more clearly in the foreseeable future and this should support the company’s earnings in the medium term,” Moore said.
“However, the question of the path to net zero remains, and many shareholders will be keen to hear more about this in future updates.”
Some Shell shareholders have expressed concern in regards to the company’s energy transition strategy after the corporate watered down its 2030 carbon reduction goal and abandoned a 2035 goal, citing “uncertainties about the pace of change in the energy transition.”
Asked whether Shell was still committed to its commitment to becoming a net zero company by 2050, Sawan replied on Thursday: “We are absolutely committed to the 2050 target, but we also recognise that the journey from here to there is not a linear one.”
He added that there might be “significant twists and turns” and that the corporate is “exercising strategic patience” to give attention to opportunities that may create value each today and over the long run.
