Oil giant Shell reveals plans to hike dividend as it reports third-quarter profit

Environment

The logo of Shell on an oil storage silo, beyond railway tanker wagons at the company’s Pernis refinery in Rotterdam, Netherlands, on Sunday, Oct. 23, 2022.
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British oil major Shell reported a third-quarter profit Thursday, but lower refining and trading revenues brought an end to its run of record quarterly earnings.

Shell posted adjusted earnings of $9.45 billion for the three months through to the end of September, meeting analyst expectations of $9.5 billion according to Refinitiv. The company posted adjusted earnings of $4.1 billion over the same period a year earlier and notched a whopping $11.5 billion for the second quarter of 2022.

The oil giant said it planned to increase its dividend per share by around 15% for the fourth quarter 2022, to be paid out in March 2023. It also announced a new share buyback program, which is set to result in an additional $4 billion of distributions and expected to be completed by its next earnings release.

Shares of Shell are up over 41% year-to-date.

The London-headquartered oil major reported consecutive quarters of record profits through the first six months of the year, benefitting from surging commodity prices following Russia’s invasion of Ukraine.

Shell warned in an update earlier this month, however, that lower refining and chemicals margins and weaker gas trading were likely to negatively impact third-quarter earnings.

On Thursday, the company said a recovery in global product supply had contributed to lower refining margins in the third quarter, and gas trading earnings had also fallen.

“The trading and optimisation contributions were mainly impacted by a combination of seasonality and supply constraints, coupled with substantial differences between paper and physical realisations in a volatile and dislocated market,” Shell said in a its earnings release.

Change in leadership

The group’s results come soon after it was announced CEO Ben van Beurden will step down at the end of the year after nearly a decade at the helm.

Wael Sawan, currently Shell’s director of integrated gas, renewables and energy solutions, will become its next chief executive on Jan. 1.

A dual Lebanese-Canadian national, Sawan has held roles in downstream retail and various commercial projects during his 25-year career at Shell.

“I’m looking forward to channelling the pioneering spirit and passion of our incredible people to rise to the immense challenges, and grasp the opportunities presented by the energy transition,” Sawan said in a statement on Sept. 15, adding that it was an honor to follow van Beurden’s leadership.

“We will be disciplined and value focused, as we work with our customers and partners to deliver the reliable, affordable and cleaner energy the world needs.”

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