Financial Energy Review
The two European companies reported earnings totaling nearly $20 billion, partly on higher energy prices as Russia’s war in Ukraine continues.
Shell, the London-based energy giant, more than doubled the profit it made a year ago.
Shell, the London-based energy giant, more than doubled the profit it made a year ago.Credit…Brandon Thibodeaux for The New York Times
Gargantuan profits continue to roll in at Europe’s energy giants. London-based Shell reported adjusted earnings of $9.45 billion for the third quarter, its second-highest profit on record. On the same day, Paris-based TotalEnergies reported a profit of $9.9 billion.
For both companies, the profits were more than double what they earned in the same period a year ago.
Shell and Total, like other energy companies this year, are benefiting from high oil and natural gas prices partly stoked by the war in Ukraine, as Russia squeezes gas flows to Europe.
For Shell, the profit was a step down from the record-breaking $11.5 billion it reported for the second quarter, when it received an average of just over $100 a barrel for oil, compared with $93 in the third quarter. Natural gas prices, however, increased in the third quarter.
Shell is returning a large chunk of this bounty to shareholders. The company said that it planned to increase its dividend to shareholders for the fourth quarter by 15 percent, to about 29 cents a share. The company also pledged to buy back $4 billion worth of its shares, bringing total buybacks announced this year to $18.5 billion, or 10 percent of the company’s share capital.
Shell’s share price jumped 4.5 percent in trading in London on Thursday.
In what may provoke a political storm in Britain, Shell said it had not yet been obliged to pay the “windfall” tax on oil and gas profits enacted earlier this year by the British government. The tax allows companies to deduct capital expenditures.
Shell has not paid windfall taxes to Britain yet because its capital expenditure on oil and gas projects in the British North Sea reduced profits, the company’s chief financial officer, Sinead Gorman, said on a call with reporters. The capital spending “has meant we haven’t had extra tax coming through in this quarter yet,” she said. Ms. Gorman said the company expected the tax to come into play early next year.
Ben van Beurden, Shell’s chief executive, said on the call that he accepted that higher taxes might be placed on oil companies to partly finance programs that help vulnerable people pay their energy bills. “I think we should be prepared and accept that our industry will be looked at for raising taxes in order to fund the transfers to those who need it most,” he said.
Shell announced last month that Mr. van Beurden would step down at the end of the year, to be succeeded by Wael Sawan, a veteran executive at the company.
Both Shell and Total are major players in liquefied natural gas, fuel that is chilled then transported on ships. There has been enormous demand for L.N.G. from Europe to replace Russian gas, and prices for the fuel have soared.
Some of Total’s L.N.G. comes from a Russian project called Yamal. Total also owns a nearly 20 percent stake in a Russian gas company called Novatek, Yamal’s main owner. Total said it was writing down the value of its Russian businesses by $3.1 billion, leaving $6.1 billion in Russian assets.
Total, which has been hit by a strike by refinery workers in France, also said that it would reward all employees worldwide with a bonus equivalent to one month’s salary.
