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Dow Jones Newswires: Shell profits climb as oil price gains offset $3.9 billion in Russia exit charges

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.

Shell’s
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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 jaime.llinares@wsj.com; @JaimeLlinaresT

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