Shell profits from oil recovery, rewards investors

Royal Dutch Shell on Thursday logged bumper second-quarter profits as oil prices recovered from Covid fallout, and rewarded investors with a buyback and dividend hike.

Net profit hit $3.4 billion (2.9 billion euros) in the three months to the end of June, the Anglo-Dutch energy major said in a results statement.

That contrasted sharply with a colossal loss of $18.1 billion last time around, when it made massive asset writedowns due to the Covid-ravaged oil market.

The performance was boosted by “higher realised oil prices, one-off favourable tax impacts, higher marketing margins and lower operating expenses”, the group added.

Shell had also rebounded into net profit in the prior three months.

“This quarter we had another strong set of results,” said chief executive Ben van Beurden.

“The resilience of our operations and unmatched cashflow show that we are delivering on our strategy.

“The strength of our performance means that we can step up shareholder distributions.”

Shell will target $2.0 billion in share buybacks this year, and hiked its shareholder dividend to 24 cents per share.

“Patience has been the name of the game for Shell investors,” said Hargreaves Lansdown analyst Susannah Streeter.

“That stoicism was sorely tested, but is now being rewarded with a slap on the back of rising returns.”

Revenues almost doubled in the second quarter to $60.5 billion, while production declined slightly to 3.25 million barrels of oil equivalent per day.

Global oil demand is recovering but supply still remains constrained due to persistent efforts by OPEC producers to limit output.

However, OPEC and its allies decided earlier this month to increase production.

OPEC+ nations agreed to pump an extra 400,000 barrels per day from August to meet rising demand as economies reopen.

At the same time, markets are increasingly nervous that the spreading Delta virus variant could undermine recovery.

Shell struck a cautious tone on Thursday over the outlook.

“As a result of the Covid-19 pandemic, there continues to be significant uncertainty surrounding how quickly macroeconomic conditions will recover, and the associated impacts on demand for oil, gas and related products,” it said.