Feb 2

Shell Posts Strong Earnings Amid Higher Oil and Gas Prices

Dimitri Frolowsckii
Feb 10, 2022
Image: Marc Rentschler via Unsplash.

Shell, Europe’s largest energy company,  reported a supersized $6.4 billion of net income for the final quarter of 2021. The earnings were driven by higher oil and gas prices and growing energy demand as the post-pandemic recovery picked up pace.

Booming prices for oil and gas propelled the company’s profit in the fourth quarter, lifting its adjusted earnings to $6.39 billion, up from $393 million in the fourth quarter of 2020. At the same time, revenues for the entire year soared to $19.29 billion, up from $4.8 billion in 2020.

Shell also boasted a reduction in net debt, by $23 billion to $52.6 billion.

The company announced that it would accelerate returns to shareholders, buying back $8.5 billion in shares in the first half of 2022. Shell also said it would increase the dividend to shareholders by 4 percent, to 25 cents per share during the first quarter.

Last month, Shell stated that oil trading had slowed down during the fourth quarter of 2021, but gas trading surged as driven by tight supply and growing demand worldwide.

The fuel price grew significantly during the past months, which helped the company with earnings but raised concerns among consumers and governments in most Western countries, where utility bills and fuel prices have risen sharply.

However, the company also indicated that oil would diminish in its long-term business plans. Since 2019, oil production has already declined by 8 percent, and it is expected to fall further by up to 2 percent a year until 2030.

Shell is planning on using the proceeds from oil and gas to reward shareholders, invest in new businesses like hydrogen, and boost its share in renewables.

The former Anglo-Dutch oil corporation dropped its Dutch headquarters last year to become a fully British-based entity. Like its peers, Shell benefitted from higher oil prices shortly after suffering from decreased operations due to a Dutch court order it to sharply reduce its carbon footprint.

In the long-term, Shell is planning to continue reducing investments into new oil and gas projects and instead focus on the energy systems of the future that rely on ESG principles.

Dimitri Frolowsckii

Dimitri Frolowsckii is a political and energy analyst with over 15 years of experience in journalism.

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