LNG giant Shell reported a drop in its adjusted earnings in the fourth quarter last year, while its LNG sales rose compared to the same period in 2022.
The UK-based firm said its adjusted earnings reached $7.3 billion in the quarter, down 25.5 percent compared to $9.81 billion in the year before.
Adjusted earnings rose 17 percent compared to $6.22 billion in the prior quarter.
Income attributable to Shell shareholders was just $474 million, and compares to $10.4 billion in Q4 2022 and $7.04 billion in the prior quarter.
Shell said income attributable to its shareholders also included net impairment charges and reversals of $3.9 billion, and unfavorable movements due to the fair value accounting of commodity derivatives.
These charges and unfavorable movements are included in identified items amounting to a net loss of $6 billion in the quarter, it said.
Cash flow from operating activities for the fourth quarter was $12.6 billion.
For the full year 2023, Shell’s adjusted earnings decreased 29 percent to $28.2 billion, while income attributable to Shell shareholders decreased 54 percent to $19.36 billion.
Shell attributed the drop to lower realized oil and gas prices, lower volumes, and lower refining margins.
CEO Wael Sawan said Shell “delivered another quarter of strong performance”.
“As we enter 2024 we are continuing to simplify our organization with a focus on delivering more value with less emissions,” he said.
“In 2023, Shell returned $23 billion to shareholders. In line with our progressive dividend policy, Shell is now increasing its dividend by 4 percent. We are also commencing a $3.5 billion buyback programme for the next three months,” Sawan said.
LNG sales rise
The company sold 18.09 million tonnes of LNG in the October-December period, a rise of 7.5 percent compared to 16.82 million tonnes in the same period last year.
LNG sales rose 13 percent compared to 16.01 million tonnes in the prior quarter.
Shell sold 67.09 million tonnes of LNG during 2023, a rise of 2 percent compared to 65.98 million tonnes in 2022.
Liquefaction volumes rose 4.1 percent year-on-year to 7.06 million tonnes in the fourth quarter and 3 percent compared to 6.88 million tonnes in the prior quarter.
During the January-December period, liquefaction volumes dropped 5 percent to 28.29 million tonnes.
Shell said liquefaction volumes decreased mainly due to the derecognition of Sakhalin-related volumes.
The firm expects liquefaction volumes to reach about 7.0 – 7.6 million tonnes in the first quarter of 2024 and the outlook reflects Prelude FLNG back in operation after a major turnaround.
Shell’s total oil and gas production increased 2 percent to 939,000 barrels of oil equivalent per day in 2023 mainly due to ramp-up of new fields in Oman, Canada, Australia, and Trinidad and Tobago, and lower maintenance in Pearl GTL in Qatar and Trinidad and Tobago.
The production was partly offset by derecognition of Sakhalin-related volumes, and production sharing contract effects in Egypt and Pearl GTL, Shell said.
Integrated gas earnings
The company’s integrated gas segment reported adjusted earnings of about $3.96 billion in the fourth quarter.
This compares to $5.96 billion in the same period a year ago and $2.52 billion in the prior quarter.
Segment earnings of $1.72 billion dropped compared to $5.29 billion in the same quarter in 2022 and from $2.15 billion in the prior quarter.
Compared with the prior quarter, integrated gas earnings reflected the net effect of higher contributions from trading and optimization, and realized prices (increase of $1,559 million), and higher volumes (increase of $81 million), partly offset by higher operating expenses (increase of $146 million), and unfavorable deferred tax movements, Shell said.
Shell announced last month that it was expecting “significantly” higher trading and optimization results for its integrated gas business in the fourth quarter of 2023 compared to the previous quarter.
For the entire 2023, adjusted earnings for integrated gas dropped 14 percent to $13.9 billion, while segment earnings decreased 68 percent to $7.04 billion.