Shell PLC on Thursday reported higher-than-expected profits for the first quarter of 2022, although the bottom-line result was hit by $3.9 billion of charges related to its exit from Russia.
The U.K. energy giant generated adjusted earnings of $9.13 billion in the first quarter, up from $6.39 billion in the fourth quarter. This was above the market consensus of $8.67 billion, provided by Vara Research and averaged from 25 analysts.
performance improved on the back of higher realized prices, higher trading profits and lower operating expenses and tax, it said. Total production fell 6% on the quarter, averaging 2.96 million oil-equivalent barrels a day.
Despite reporting higher earnings, net profit fell to $7.12 billion from $11.46 billion as the company booked post-tax charges of $3.9 billion related to the phased withdrawal from Russian oil and gas operations.
These charges included a $1.61 billion impairment related to the Sakhalin-2 oil and LNG project with Gazprom PJSC and a $1.13 billion write-down related to a loan for the Nord Stream 2 gas pipeline.
Cash flow from operations rose by 81% to $14.82 billion in the first quarter, and net debt was reduced to $48.49 billion from $52.56 billion.
Shell declared a dividend of $0.25 a share for the period, up from $0.24 in the fourth quarter of 2021, and said shareholder distributions in the second half will be in excess of 30% of operating cashflow.
The company confirmed that it will complete the $8.5 billion buyback program for the first half by the announcement of the second quarter results.
Looking forward, Shell said production from its Integrated Gas division will rise to 910,000-960,000 oil-equivalent barrels a day in the second quarter, although LNG volumes will fall to 7.4 million-8.0 million metric tons due to the derecognition of Sakhalin-related output.
Upstream production is expected to drop to 1.75 million-1.95 million barrels a day due to lower seasonal demand and increased scheduled maintenance. Marketing sales volumes are seen at 2.30 million-2.80 million barrels a day, compared with 2.37 million in the first quarter.
In addition, Shell expects chemicals sales volumes of 3.10 million -3.50 million tons in the second quarter, with refinery utilization falling to 65%-73% and chemicals plant utilization declining to 69%-77% due to scheduled turanrounds and maintenance.
Shares at 0702 GMT were up 2.3% at 2,276 pence.
Write to Jaime Llinares Taboada at firstname.lastname@example.org; @JaimeLlinaresT