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Shell Launches $6bn Buyback Scheme After Reporting $11.5bn Earnings

Shell has broken its profit record for a second consecutive quarter and announced a $6bn share buyback scheme as the fallout from the war in Ukraine continues to generate bumper earnings for the world’s oil and gas majors.

Disruption to global commodity flows following the Russian invasion has collided with resurgent consumer demand in the first half of the year, pushing prices for oil, gas and refined petroleum products to record levels.

Shell is the first of the supermajors to report its half-year results, with ExxonMobil, Chevron and BP also expected to reveal strong performances in the coming days.

Several countries, including the UK, have imposed additional taxes on energy companies this year but another round of record profits could lead to calls for additional levies.

Shell reported adjusted earnings of $11.5bn in the second three months of the year, breaking the record $9.1bn posted in the first quarter. That beat average analyst estimates of $11bn and was more than double the $5.5bn it recorded a year ago.

France’s TotalEnergies, which also reported results on Thursday, said second-quarter profits had almost tripled to $9.8bn compared with a year earlier. In the UK, Centrica, owner of British Gas, reported a fivefold increase in operating profits during the energy crisis. Shell chief executive Ben van Beurden, who opposed the UK government’s energy profits levy, which was introduced in May, rejected calls for another round of tax increases, arguing instead for more investment.

Shell left its dividend at $0.25 a share but said that, with the $6bn buyback plan, total distributions to shareholders would be “significantly in excess” of 30 per cent of cash flow from operations. The new round of share purchases follows $8.5bn of buybacks that were completed in the first half of the year.

The dividend is still a long way below its pre-pandemic level of $0.47 a share. In 2020, Shell slashed the dividend by two-thirds to $0.16, the first reduction since the second world war, as lockdowns hit demand and pushed oil prices below $20 a barrel.

Source: Financial Times

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