3rd Feb 2022 08:28
(Alliance News) - Shell PLC on Thursday said it will up the pace of investor returns this year after its earnings jumped in a "momentous" 2021, aided by rampant oil prices.
Shares in the company were 1.1% higher at 1,952.80 pence each in London on Thursday morning.
The year saw Shell unveil changes at both an operational and organisational level. It recently simplified its share structure and dropped the 'Royal Dutch' from its name. It also sold assets, notably in the Permian Basin of the US.
Earnings jumped in 2021, helped by a strong fourth quarter for the oil major.
For the last quarter of 2021, total revenue, so including joint-ventures and interest income, more than doubled annually to USD90.22 billion from USD45.03 billion. Fourth-quarter pretax profit multiplied to USD16.27 billion from USD1.19 billion.
Fourth quarter adjusted earnings, a closely-watched profit gauge, surged to USD6.39 billion, from a meagre USD393 million a year earlier. It was up 55% from USD4.13 billion achieved in the third quarter.
Adjusted earnings for the quarter were driven by Shell's Integrated Gas arm. The Integrated Gas, Renewables & Energy Solutions unit was boosted by average liquid prices surging to USD77.75 a barrel in the fourth quarter from USD68.04 a barrel in the third quarter.
For the whole of 2021, revenue increased by 49% to USD272.66 billion from USD183.20 billion. Shell swung to an annual pretax profit of USD29.83 billion from a USD26.97 billion loss in a Covid-damaged 2020.
At USD19.29 billion, up sharply from USD4.85 billion, adjusted earnings for the year topped market consensus of USD18.01 billion.
"2021 was a momentous year for Shell. We launched our 'powering progress' strategy and simplified our share structure and organisation. Progress made in 2021 will enable us to be bolder and move faster. We have a compelling strategy, with customers at its core. We have ambitious plans to generate shareholder value, to decarbonise our products and to provide energy to our customers while respecting nature," Chief Executive Ben van Beurden said.
Shell also said it will lift shareholder returns.
It will increase the pace of its share buybacks to USD8.5 billion in the first half of 2022, including the remaining USD5.5 billion proceeds from its Permian disposal. Shell in January had vowed only to progress its buybacks "at pace".
Shell had announced the USD9.5 billion sale of assets in the shale-oil-rich Permian Basin of the US to ConocoPhillips back in September.
Shell also increased its annual dividend by 37% to USD0.8935 per share, from USD0.6530 in 2020. The company will raise its first quarter dividend to USD0.25 per share from the USD0.24 declared for the fourth quarter of 2021.
Looking ahead, Shell said cash capital expenditure for 2022 will be at the lower end of a USD23 billion to USD27 billion range.
Fourth quarter output was slightly mixed, meanwhile. In Integrated gas, production fell to 927,000 barrels of oil equivalent per day from 938,000 in the third quarter. For the first quarter of 2022, output of between 760,000 and 820,000 boepd is forecast.
Fourth quarter Upstream production rose quarter-on-quarter to 2.16 million boepd, from 2.08 million. The first quarter range stands between 2.00 million and 2.20 million.
By Eric Cunha; [email protected]
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