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Shell Rises Earnings to $7.3 Billion in Latest Quarter, LNG Sales Up

Shell was the first of the global energy giants to report its full-year results for 2023.

Recently, Shell has started reducing staff across the company, including in its low-carbon solutions division.

Shell's total capital spending was US$24.4 billion in 2023, and it's expected to be between US$22 billion and US$25 billion this year.

Shell PLC revealed it made a profit of US$28 billion for 2023, thanks to strong earnings from trading liquefied natural gas (LNG). The company saw its quarterly adjusted earnings rise to $7.3 billion in the fourth quarter, up from $6.2 billion in the third quarter of 2023. This financial success allowed the company to raise its dividend and continue buying back shares.

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The profit for the year was 30% less than the previous year's record high. This drop was due to smaller profits in chemicals and refining and slower fuel sales in a weak global economy. This follows a year of high profits in 2022, boosted by rising energy prices after Russia's invasion of Ukraine.

Shell raised its fourth-quarter dividend by 4% and announced it would buy back another US$3.5 billion in shares over the next three months, maintaining the rate of the last quarter.

In 2023, Shell gave back about US$23 billion to its shareholders, which is over 10% of its market value. This reflects the focus on returns among investors as the energy sector faces an uncertain future for fossil fuels.

Its stock ended 2.4% higher, outperforming its rivals with an over 8% increase over the past year.

Wael Sawan became the CEO in January 2023, promising to shift Shell's focus towards higher-margin projects, maintaining steady oil production, and boosting natural gas output.

“As we enter 2024 we are continuing to simplify our organization with a focus on delivering more value with less emissions,” Sawan said.

There's a noticeable shift in priorities, with spending in the renewables and energy solutions division dropping by 23% from the previous year to US$2.7 billion. This accounted for 11% of Shell's total capital expenditure in 2023, down from 14% in 2022.

LNG Sales Up

Shell's total production of oil and gas in 2023 was up by 2% to 939,000 barrels of oil equivalent per day. This increase came from starting up new fields in locations like Oman, Canada, Australia, and Trinidad and Tobago, along with less maintenance work in Qatar and Trinidad and Tobago.

The production increase was slightly offset by not including Sakhalin-related volumes and the effect of production sharing contract changes in Egypt and Qatar.

In the October to December period, Shell's LNG sales went up by 7.5% to 18.09 million tonnes, compared to 16.82 million tonnes during the same timeframe last year. This growth is also higher than the sales from the previous quarter, which were 16.01 million tonnes, marking a 13% increase.

Throughout 2023, Shell managed to sell 67.09 million tonnes of LNG, showing a 2% increase from the 65.98 million tonnes sold in 2022.

The company's production of LNG in the fourth quarter saw a 4.1% year-on-year rise to 7.06 million tonnes and a 3% increase from the 6.88 million tonnes produced in the quarter before. However, the total production for the year dropped by 5% to 28.29 million tonnes, mainly due to cutting out Sakhalin-related volumes.

“Shell’s LNG division continues to help support cash generation and the company also appears to have operational momentum.”

RBC Capital Markets analyst Biraj Borkhataria

Looking ahead to the first quarter of 2024, Shell is aiming for liquefaction volumes between 7.0 and 7.6 million tonnes, with the Prelude FLNG expected to be back in operation after a major overhaul.

About Shell PLC

Shell PLC, headquartered in London, UK, is a global powerhouse in the oil and gas industry, known for its extensive operations in exploration, production, refining, transportation, distribution and marketing, petrochemicals, power generation, and trading.

Shell reported pre-tax impairment charges of US$5.5 billion in the last quarter of 2023. This includes US$2.5 billion from devaluing its Singapore chemicals business and US$1.2 billion from adjustments in oil and gas projects in Nigeria, Britain, and North America.

Shell's operations include a major role in LNG and gas to liquids (GTL) projects, its offerings spanning lubricants, bitumen, liquefied petroleum gas (LPG), and various petrochemical products.

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