Shell Reports $9.6 Billion Profit, Despite Falling Oil Prices

Shell, Europe’s largest energy company, said Thursday that its first-quarter profit rose 6% to $9.6 billion.

Adjusting for items such as sales, the company’s earnings fell short of the $11.5 billion record set for the second quarter of 2022, but still beat analyst estimates.

Shell’s European rival also reported a hefty profit in the first quarter. BP had him at $5 billion and France’s Total Energies at him at $6.5 billion.

Oil and gas prices are below last year’s peak but remain relatively strong. International benchmark Brent crude has fallen about 15% to $73 a barrel since April 12, despite the oil cartel known as OPEC Plus recently announcing it would cut production from this month.

Major energy companies are using the energy trading sector to capitalize on the rapid price volatility caused by uncertainties such as the war in Ukraine and the shift from fossil fuels to cleaner alternatives, thereby reducing the Benefit from a stable environment.

These units make a profit by trading a wide range of fuels produced by large companies. Both Shell and BP credit their trading arms for strong first quarter results.

Shell is considered Europe’s largest energy trader. The company’s chief executive, he Wael Sawan, told analysts on Thursday that he expects the deal to play an even bigger role as the industry shifts to cleaner fuels like hydrogen.

Oswald Clint, an analyst at research firm Sanford C. Bernstein, said in a note to clients that trading contributed an average of $6.4 billion to combined quarterly profits for the three largest European companies. “Volatility totally affects the hands of these companies,” he wrote.

But when it comes to large energy companies, investors are still focused on dividends and share buybacks. BP disappointed on Tuesday by announcing it would delay a share buyback, sending shares down more than 8% of his.

But Shell said it plans to buy $4 billion of stock in the second quarter and will keep pace with the program. The company said total distributions to shareholders, including dividends, will be $12 billion in the first half of this year.

Shell shares rose nearly 2% in London trading.

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