LONDON—
Shell
SHEL -0.83%
PLC became the latest oil giant to post a record annual profit last year, joining American peers in surging back from early pandemic losses on soaring energy prices.
Shell’s $41.6 billion full-year profit surpassed the London-based company’s previous record of $31.4 billion in 2008, measured on a net current-cost-of-supplies basis—a figure similar to the net income that U.S. oil companies report.
The results bring to more than $132 billion the combined profit last year of the three big majors—including historic results from
Chevron Corp.
and Exxon Mobil Corp.—reported during the past week. Their hauls, driven by strong global energy demand, erase billions of dollars of losses incurred during Covid lockdowns as global travel and economic activity sputtered.
Shell’s earnings included fourth-quarter profit on a net current-cost-of-supplies basis of $11.4 billion, up slightly from $11.2 billion a year earlier. Results were boosted by strong performance in Shell’s liquefied natural-gas business, which benefited from soaring global demand after Russia cut off pipeline gas supplies to Europe.
Adjusted fourth-quarter earnings, which strip out certain commodity price adjustments and one-time charges, were $9.8 billion. That beat the consensus forecast of $8 billion for the quarter in a survey of 28 analysts compiled for Shell by an outside firm.
Shell’s results are the first reported under Chief Executive
Wael Sawan,
who took over the role Jan. 1 from longtime boss
Ben van Beurden.
The 48-year-old Mr. Sawan, a dual Lebanese-Canadian national who joined Shell in 1997, rose through the ranks to oversee Shell’s natural-gas business—which has driven record profits—and more recently renewable energy.
International oil companies mounted a comeback last year as oil and gas prices worldwide soared after Russia invaded Ukraine and energy demand surged. European natural-gas and American gasoline prices climbed to records, showering oil-and-gas companies with cash while driving tens of billions of dollars in share repurchases and dividends.
But the bounty has stoked political and consumer anger as governments and companies struggle with high energy prices. Last month, Shell said in an earnings preview that it expects to pay around $2 billion more in European Union and U.K. energy-profit levies—so-called windfall taxes—that governments have adopted to help businesses and consumers cope with soaring energy costs. That is on top of $360 million in anticipated windfall taxes that were previously disclosed.
Mr. Sawan will have to contend with that societal backlash and the bigger existential question facing the oil-and-gas industry: How to balance the world’s thirst for oil and gas while pushing further into lower-carbon energy like clean-burning hydrogen, solar and wind power?
In his first public changes at Shell, announced earlier this week, Mr. Sawan shrank the company’s top leadership ranks to seven executives from nine and combined reporting lines for its liquefied natural gas and broader oil-and-gas production businesses.
In a statement, Mr. Sawan said the moves will help streamline decision making around strategy and spending.
“Shell is a great company and we’re changing to ensure we become a great investment too,” he said.
European oil majors like Shell and London-based rival
BP
PLC face greater investor and government scrutiny over their carbon-reduction plans than do U.S. rivals, which have stuck more to their core oil-and-gas businesses. But the sector globally is wedged between some large investors and governments calling for accelerated shifts away from fossil fuels and others continuing to demand the profits that those assets can generate.
On Wednesday, The Wall Street Journal reported that BP, which releases earnings next week, is dialing back elements of its renewable-energy push in part to focus more on its legacy oil-and-gas operations.
The pressure on Shell is also playing out in court. The company has appealed a landmark 2021 Dutch court ruling ordering it to pick up the pace at which it is reducing carbon emissions. Shell has said it is unfairly being singled out in the case, brought by environmental groups.
Write to Jenny Strasburg at jenny.strasburg@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
LONDON—
Shell
SHEL -0.83%
PLC became the latest oil giant to post a record annual profit last year, joining American peers in surging back from early pandemic losses on soaring energy prices.
Shell’s $41.6 billion full-year profit surpassed the London-based company’s previous record of $31.4 billion in 2008, measured on a net current-cost-of-supplies basis—a figure similar to the net income that U.S. oil companies report.
The results bring to more than $132 billion the combined profit last year of the three big majors—including historic results from
Chevron Corp.
and Exxon Mobil Corp.—reported during the past week. Their hauls, driven by strong global energy demand, erase billions of dollars of losses incurred during Covid lockdowns as global travel and economic activity sputtered.
Shell’s earnings included fourth-quarter profit on a net current-cost-of-supplies basis of $11.4 billion, up slightly from $11.2 billion a year earlier. Results were boosted by strong performance in Shell’s liquefied natural-gas business, which benefited from soaring global demand after Russia cut off pipeline gas supplies to Europe.
Adjusted fourth-quarter earnings, which strip out certain commodity price adjustments and one-time charges, were $9.8 billion. That beat the consensus forecast of $8 billion for the quarter in a survey of 28 analysts compiled for Shell by an outside firm.
Shell’s results are the first reported under Chief Executive
Wael Sawan,
who took over the role Jan. 1 from longtime boss
Ben van Beurden.
The 48-year-old Mr. Sawan, a dual Lebanese-Canadian national who joined Shell in 1997, rose through the ranks to oversee Shell’s natural-gas business—which has driven record profits—and more recently renewable energy.
International oil companies mounted a comeback last year as oil and gas prices worldwide soared after Russia invaded Ukraine and energy demand surged. European natural-gas and American gasoline prices climbed to records, showering oil-and-gas companies with cash while driving tens of billions of dollars in share repurchases and dividends.
But the bounty has stoked political and consumer anger as governments and companies struggle with high energy prices. Last month, Shell said in an earnings preview that it expects to pay around $2 billion more in European Union and U.K. energy-profit levies—so-called windfall taxes—that governments have adopted to help businesses and consumers cope with soaring energy costs. That is on top of $360 million in anticipated windfall taxes that were previously disclosed.
Mr. Sawan will have to contend with that societal backlash and the bigger existential question facing the oil-and-gas industry: How to balance the world’s thirst for oil and gas while pushing further into lower-carbon energy like clean-burning hydrogen, solar and wind power?
In his first public changes at Shell, announced earlier this week, Mr. Sawan shrank the company’s top leadership ranks to seven executives from nine and combined reporting lines for its liquefied natural gas and broader oil-and-gas production businesses.
In a statement, Mr. Sawan said the moves will help streamline decision making around strategy and spending.
“Shell is a great company and we’re changing to ensure we become a great investment too,” he said.
European oil majors like Shell and London-based rival
BP
PLC face greater investor and government scrutiny over their carbon-reduction plans than do U.S. rivals, which have stuck more to their core oil-and-gas businesses. But the sector globally is wedged between some large investors and governments calling for accelerated shifts away from fossil fuels and others continuing to demand the profits that those assets can generate.
On Wednesday, The Wall Street Journal reported that BP, which releases earnings next week, is dialing back elements of its renewable-energy push in part to focus more on its legacy oil-and-gas operations.
The pressure on Shell is also playing out in court. The company has appealed a landmark 2021 Dutch court ruling ordering it to pick up the pace at which it is reducing carbon emissions. Shell has said it is unfairly being singled out in the case, brought by environmental groups.
Write to Jenny Strasburg at jenny.strasburg@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8