Shell’s Recording-Breaking Streak: $20.6B Profit Over Last Two Quarters

British multinational oil and gas company Shell has posted record results in the second quarter of the year, smashing the $9.1 billion it set during the first quarter with an $11.5 billion profit. The company’s continued outperformance is largely attributed to soaring oil and gas prices as well as a tight market for refined products.

Ukraine War and Inflation Fueled Shell’s Remarkable Performance in Q1

During the first quarter of the year, Shell reported its highest ever quarterly profits, with adjusted earnings rising to $9.1 billion. The figure, which was almost three times the $3.2 billion the company registered a year earlier, beat analyst estimates of $8.7 billion and was up by over 42% from $6.4 billion recorded in the last quarter of 2021.

The energy giant’s remarkable performance came as Russia’s invasion of Ukraine sent oil and gas prices, which were already high due to inflation and supply chain bottlenecks, further through the roof. According to the European Central Bank, energy prices in Europe started to increase at the end of 2021 and the beginning of 2022. 

The jump in prices initially came after countries started to left or reduce lockdown measures, which led to the demand for energy recovering. The second spike in energy prices came in 2021 amid surfacing supply-side issues as well as surging inflation.

This development was aggravated earlier this year by the Russian invasion of Ukraine. Since Russia was responsible for supplying more than 40% of Europe’s total gas consumption, 27% of oil, and 46% of its coal consumption, the war and succeeding rounds of sanctions heightened the energy crisis. 

Shell and Other “Supermajors” Post Record Profits in Q2

After its exceptional performance in the first quarter, Shell reported record earnings for the second consecutive quarter on Thursday. The company is thriving as gas and oil prices continue their upward trajectory with no signs of cooling down, at least in the foreseeable future. 

The energy giant posted adjusted earnings of $11.5 billion in the second quarter of the year, beating average analyst estimates of $11 billion. The figure was more than double the $5.5 billion it recorded a year ago and broke the record $9.1 billion posted in the first quarter.

Despite posting around 20% more profit in the last quarter than the first quarter, Shell actually produced less oil compared to the first three months of the year. This reflects the soaring cost of crude in April, May, and June following Russia’s February invasion of Ukraine.

France’s TotalEnergies also reported record profits for the second quarter of the year, posting earnings of $9.8 billion, which almost tripled compared with a year earlier. Likewise, UK-based Centrica, owner of British Gas, reported a fivefold increase in profits courtesy of the energy crisis.

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$6B Buyback Plan Announced

It is worth noting that countries might impose additional taxes on energy companies after the latest round of record profits. This could be in addition to the recently announced levies, including the UK’s 25% energy windfall tax declared in late May. 

Meanwhile, Europe’s biggest oil companies have announced share buyback schemes after their record-breaking earnings report. Shell plans to buy back $6 billion in shares by late October, which comes on the back of an $8.5 billion buyback scheme finished in the first half. On the other hand, TotalEnergies aims to buy back $2 billion in Q3 after purchasing $3 billion of its own shares in Q1. 

Shell’s shares closed the latest trading day in the green, up by 0.14%. The company’s stock is also currently in the green in premarket trading, up by more than 1%. 

Do you think energy companies would continue to shine during the third and fourth quarters of the year? Let us know in the comments below.