July 27 (UPI) — Energy company Shell on Thursday turned in a second quarter profit of $5.1 billion, sharply lower than first quarter levels because of a decline in commodity prices.
Shell’s second quarter performance was paltry compared to the $9.6 billion reported for the first quarter. The company attributed much of the loss to lower crude oil and natural gas prices, as well as weaker refining margins.
Those margins reflect the cost of refined petroleum products relative to market prices. The price for Brent crude oil, the global benchmark for the price of oil, averaged $81.17 per barrel during the first quarter, but fell to $78.31 per barrel during the three-month period ending in June.
Shell in theory could see profits recover during the third quarter with Brent trading Thursday at around $83 per barrel.
Wael Sawan, the company’s chief executive, was undeterred about returning any value back to the shareholder. Dividends increased by 15% and the company was going above and beyond its guidance of $3 billion in share buybacks.
“As we deliver more value with less emissions, we will continue to prioritize share buybacks, given the value that our shares represent,” he said.
Shares of Shell were down nearly 2% in early trading to move into the low $60 range.
Major energy companies have come under fire for focusing on shareholder returns rather than future production. Many analysts believe supplies will be at a premium during the second half of the year, in part because of production restraint from OPEC+, the core members of the Organization of the Petroleum Exporting Countries and non-member states such as Russia.
Shell added that its spending forecast for the year was revised lower. On production, the company reported an average of 1.87 million barrels of oil equivalent per day during the first quarter, but only 1.7 million BOE/d during the three-month period to June.
Outlook for the year put 1.8 million BOE/d at the high-water mark. And even though first-quarter profits were close to $10 billion, that was about $200 million lower than during the fourth quarter of 2022.
On energy trends, Shell in the past has seen support from its natural gas segment. It’s been spending on emerging and cleaner alternatives for energy, but remains focused on fossil fuels.
Last month, the Advertising Standards Authority, a British advertising watchdog, said Shell misled consumers with ad campaigns touting its low-carbon focus while its actual business model is geared toward oil and gas.
