Shell has again boosted its dividend and share repurchases after fourth-quarter profits hit their highest level in eight years, fuelled by higher oil and gas prices and strong gas trading performance.
The strong results cap a year of dramatic recovery for Shell and the oil and gas sector after energy demand and prices collapsed in 2020 during the coronavirus epidemic.
Global natural gas and electricity prices have soared since the middle of last year on tight gas supplies and higher demand as economies rebounded from the Covid-19 pandemic. The price rises have left UK households on the brink of a cost of living crisis, as the energy regulator prepares to raise the maximum price of home energy bills by up to 50% above current record highs.
Shell, which moved its headquarters from The Hague to London last month, said it expected to raise its dividend by 4% in the first quarter of 2022 to $0.25 a share.
Fourth-quarter 2021 adjusted earnings rose by 55% from the previous quarter to $6.4bn (£4.7bn), well above an average analyst forecast provided by the company for a $5.2bn profit. That compares with earnings of $393m a year earlier.
For the year, Shell’s adjusted earnings rose to $19.3bn compared with $4.85bn in 2020.
The company also announced it would buy back $8.5bn worth of shares in the first half of 2022, including $5.5bn from the sale of its Permian shale assets in the US. That compares with share buybacks totalling $3.5bn in 2021.
The Shell chief executive, Ben van Beurden, said in a statement that “2021 was a momentous year for Shell”.
Benchmark European gas prices and Asian LNG prices hit all-time highs in the fourth quarter.
Shell, the largest trader of liquefied natural gas (LNG), said its integrated gas earnings were boosted by “significantly higher” profits from trading. LNG sales grew in the fourth quarter to 16.72m tonnes despite unplanned maintenance at its flagship Prelude floating LNG plant in Australia.
Shell’s US rival Exxon Mobil on Tuesday reported its largest profit in seven years and said it planned to boost domestic production by 25% this year. Chevron’s profit missed estimates.
Shell earlier this month officially ditched “Royal Dutch” from its name and merged its dual-listed shares after moving its head office from The Hague to London as part of a tax and structure simplification drive, which Van Beurden said would help the company plan to grow its low-carbon business.