LNG giant Shell reported a drop in its adjusted earnings in the second quarter, while its LNG sales rose when compared to the same period in the year before.
The firm said its adjusted earnings reached $5.07 billion in the quarter, a drop of 55.7 percent compared to $11.47 billion in the year before. Adjusted earnings dropped by 47 percent compared to $9.64 billion in the prior quarter.
Income attributable to Shell shareholders was $3.13 billion, compared with $18.04 billion in the second quarter last year and $8.7 billion in the previous quarter.
Compared to the prior quarter, income attributable to Shell shareholders mainly reflected lower LNG trading and optimization results, lower realized oil and gas prices, lower refining margins, and lower volumes, Shell said in the report.
It also included net impairment charges and reversals of $1.7 billion.
Cash flow from operating activities was $15.1 billion, and included a working capital
inflow of $4.8 billion, and tax payments of $3.8 billion.
The working capital inflow mainly reflected lower prices on inventories, initial margin inflow, a decrease in over-the-counter collateral, and other accounts receivable and payable movements, Shell said.
“Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment,” CEO Wael Sawan said.
“Today we are delivering on our Capital Markets Day commitment of a 15 percent dividend increase. We are going further on our buyback guidance by commencing a $3 billion program for the next three months and, subject to board approval, at least $2.5 billion at the Q3 2023 results,” he said.
LNG sales up, liquefaction volumes down
Shell sold 16.03 million tonnes of LNG in the April-June period, a rise of 5.4 percent when compared to 15.21 million tonnes in the same period last year.
Sales dropped by 6 percent compared to 16.97 million tonnes in the prior quarter.
Liquefaction volumes dropped to 7.17 million tonnes in the second quarter when compared to 7.66 million tonnes in the same quarter last year and were almost flat compared to 7.19 million tonnes in the prior month.
During the first half, Shell’s LNG sales dropped by 2 percent to 33 million tonnes, while liquefaction volumes decreased by 8 percent to 14.35 million tonnes.
The firm expects liquefaction volumes to reach about 6.3 – 6.9 million tonnes in the third quarter and the outlook reflects scheduled maintenance, including at Prelude and Trinidad and Tobago, it said.
Total oil and gas production, compared with the first quarter 2023, increased by 2 percent to 985,000 barrels of oil equivalent per day mainly due to the ramp-up of new fields, and lower maintenance, Shell said.
Integrated gas earnings
The company’s integrated gas segment reported adjusted earnings of about $2.5 billion in the second quarter.
This compares to $3.75 billion in the same period a year ago and $2.41 billion in the prior quarter.
Segment earnings of $754 million dropped by 64 percent compared to $2.41 billion in the prior quarter. Segment earnings nosedived from $8.1 billion in the same quarter last year.
Compared with the prior quarter, integrated gas earnings reflected the effect of lower contributions from trading and optimization due to seasonality and fewer optimization opportunities and lower realized prices, and unfavorable deferred tax movements, Shell said.
Shell announced on July 7 that it was expecting “significantly lower” trading and optimization results for its integrated gas business in the second quarter of this year compared to the previous quarter.