Shell's net profit more than doubled from last year to US$9.84 billion in the second quarter, beating expectations, helped by higher energy prices and increased market volatility during the Middle East conflict.
Higher oil and gas prices, stronger liquefied natural gas (LNG) and oil trading and improved chemicals margins helped support the British major's earnings, offsetting lower volumes caused by disruptions to its Qatar operations.
Analysts had expected adjusted earnings, Shell's measure of net profit, of US$8.92 billion, according to a company-provided consensus, compared with US$4.26 billion a year earlier.
Market disruptions and volatility caused by the U.S.-Israeli war with Iran have created opportunities for the large trading businesses operated by companies such as Shell, BP and TotalEnergies.
Shell's refineries were running at 102 percent of their nameplate capacity during the quarter to make the most of high fuel prices, which helped increase production of jet fuel by a fifth from a year ago, according to a Shell spokesperson.
Shares in Shell were up 0.8 percent by 0937 GMT, outperforming a flat broader European energy sector.
While it remains one of the least leveraged oil majors, Shell continues to trade at a discount to European peers Eni and TotalEnergies, reflecting investor concerns about the growth potential of its upstream business, Citi analysts said.
Profits in the quarter were Shell's second-highest on record, surpassed only by the second quarter of 2022, when Russia's invasion of Ukraine upended global energy markets.
It reported its highest operating cash flow, including working-capital movements, since 2022. Still, it said it would maintain the pace of its share buyback programme at US$3 billion over the next three months.
Profits from Shell's integrated gas business, which includes the world's biggest LNG trading desk, comfortably beat expectations at US$2.7 billion, 55 percent above last year's and despite its gas production falling 31 percent quarter-on-quarter.
Its chemicals and products unit, home to its oil product trading desk, also outperformed expectations, jumping to US$2.9 billion from US$118 million a year ago.
Shell forecast third-quarter integrated gas production of 570,000 to 630,000 barrels of oil equivalent per day after 631,000 boed in the second quarter, and LNG liquefaction volumes of 7.1 million to 7.7 million tons after 7.7 million tons in the second quarter. It expects upstream production of 1.68 million to 1.88 million boed following 1.82 million boed in the second quarter.
It expects higher maintenance activity for its upstream and refining assets in the third quarter.
Production at Shell's Pearl gas-to-liquids plant in Qatar was halted in March after an attack damaged one of the facility's two trains. Shell has said repairs could take about a year and in the meantime, output in Canada, Nigeria and Australia was helping make up the loss in capacity.
The Middle East accounts for about 20 percent of Shell's oil and gas production, or 550,000 barrels of oil equivalent per day, with about 10 percent linked to Qatar.
Shell's net debt dropped to US$41.8 billion, from US$52.6 billion at the end of the first quarter. Its gearing, or debt-to-equity ratio including leases, fell to 18.7 percent from 23.2 percent last quarter.
Brent crude averaged about US$97 a barrel in the quarter, while benchmark European gas prices averaged about €46 per megawatt-hour, both up sharply from a year earlier.
Reuters
