Achi news desk-
This was lower than the $9.6bn booked in the same quarter last year but still ahead of the $6.5bn forecast by analysts. Cash flow at Europe’s biggest oil and gas operator jumped 6% from the previous quarter to $13.3bn.
Declaring that “2024 is off to a good start”, Shell chief financial officer Sinead Gorman said: “We delivered yet another set of strong operational and financial results in the first quarter.
Deltic is backed by Shell and Dana as it targets large prospects
“Higher upstream, our conventional oil and gas business performed very well, with many of our core assets providing high controllable availability. We also started production at our Rydberg field, which is connected to our Appomattox production base, reinforcing our leading deepwater position in the Gulf of Mexico where our oil production has some of the lowest greenhouse gas intensity in the world . This is another project that supports the energy security the world needs and underpins the longevity of our cash flow.”
During Q1, Ms Gorman noted that Shell’s Polymers Monaca petrochemical plant near Pittsburgh increased to full operation while in its renewable energy and energy solutions business “we have strategically diluted part of our stake in the Texan Brazos wind farm, while retain access to 100% of the funds available as part of our integrated energy strategy”.
He added: “In the first quarter, we had high liquidity numbers combined with strong seasonal trading and optimization in our integrated gas business despite the market conditions being less favorable than in Q4. In chemicals, we saw a clear improvement in performance compared to previous quarters, and we still have potential for further growth.”
He noted that Shell’s products business was strong, particularly in terms of trading and optimization, where the company was able to “capture high profits due to global product supply disruptions”.
Ms Gorman added: “We remain disciplined about our capital expenditure, and our balance sheet is strong. And for the rest of 2024, we will continue to drive performance, focus on our strengths, and continue to deliver more value with less emissions.”
Oil and gas giant Shell is reporting a sharp drop in profits
Hargreaves Lansdown’s head of equity research, Derren Nathan, impressed analysts, describing the first quarter’s cash flows as “stunning”, noting: “Shell’s has produced yet another quarter of stunning cash flows. Higher margins and uptime at its refineries more than offset lower returns at the upstream and integrated gas divisions.
“The strong cash generation enables Shell to reduce debt, reward shareholders (it has also raised the dividend by 20% year-on-year) and continue to invest in the business as it targets total spending of $22-$25bn in 2024 and 2025.
“Shell remains ‘committed to oil and gas’ which may disappoint environmentalists, but has made meaningful reductions in its Scope 1 and 2 emissions in recent years and slightly increased its renewable power generation capacity in the quarter .”
Shell defends climate policy as Scottish Widows seeks change
Highlighting the fact that the energy giant’s development portfolio has a wide range of projects across the energy mix, from the Mero deepwater fields in offshore Brazil to the 1.5GW Atlantic Shores offshore wind farm, the largest project of its kind in the United States, he added: “There is no doubt that Shell is relentlessly focused on shareholder value and over the long term the sub-10 times earnings multiple does not look too onerous.
“Price volatility is an ongoing risk across the sector but it is one that Shell is navigating admirably.”
At RBC Brewin Dolphin, investment manager Stuart Lamont noted: “Shell has beaten expectations by a significant margin, despite the impact of lower gas prices in the first quarter. Earnings are up, costs are down, and the oil and gas major has also reduced debt – overall, it’s a solid set of numbers and underlines why the market, in general, is still strong on Shell.”
However, AJ Bell investment director Russ Mould noted that profits were “still down significantly year on year, reflecting the wider industry trend”, adding: “CEO Wael Sawan is desperate to close the pricing gap on the company’s American competitors. Its focus on this goal has led to a dialing back of environmental commitments and the not-too-subtle suggestions of moving the primary listing across the Atlantic.
“Although he cannot do anything about the volatility in commodity prices, Sawan has managed to secure lower costs and lower debts, and has improved the group’s profitability, increased numbers and shown a good level of capital discipline.”
