Shell posts record profit on high energy prices and trading boost

Results were enhanced by strong oil and gas trading

Shell reported on Thursday a record first-quarter profit of $9.13 billion, boosted by higher oil and gas prices. AFP

Shell on Thursday reported a profit of $9.13 billion in the first quarter, its highest ever, boosted by higher oil and gas prices and a strong performance of its trading division.

The profits came despite the British company writing down $3.9bn after quitting its operations in Russia, where it plans to end all crude oil purchases except for two contracts with a "small, independent Russian producer" it did not name.

Shell's shares rose 2.6 per cent in early trading, outperforming the 1.7 per cent rise of an index of energy companies, after profits beat their previous all-time high from 2008.

Shell joins sector rivals, including BP and TotalEnergies, which also saw a sharp rise in profits driven by energy prices and strong trading. Norway's Equinor, a major seller of gas in Europe, reported record earnings on Wednesday.

Britain's Prime Minister Boris Johnson, who faces a political test in a round of local elections on Thursday, has rejected calls to tax these swelling profits to ease the pressure on household bills - with ministers arguing instead that energy giants need the money to invest in clean energy.

Shell's first-quarter adjusted earnings rose 43 per cent from the previous quarter to $9.13bn, above an average analyst forecast provided by the company for a $8.67bn profit. That compares with earnings of $3.13bn a year earlier.

It said its dividend payments and share repurchases reached $5.4 billion in the quarter, part of its plan to buy back $8.5 billion shares in the first half of the year.

The company said that in the current environment it expects shareholder distributions to exceed 30 per cent of cashflow in the second half of the year.

Shell said it wrote down $3.9 billion post-tax as a result of its decision to exit its operations in Russia following Moscow's invasion of Ukraine on February 24. It is also winding down oil and gas trading with Russia.

Shell plc chief executive officer Ben van Beurden said: "The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted.

"The impacts of this uncertainty and the higher cost that comes with it are being felt far and wide. We have been engaging with governments, our customers and suppliers to work through the challenging implications and provide support and solutions where we can."

On Tuesday, energy giant BP reported a $20.4 billion loss for the first quarter of the year after the hit it took from pulling out of Russia wiped out extra revenues from soaring fuel prices. BP reported an underlying profit of $6.2bn, more than double the quarter in the year-earlier period, beating analyst expectations of $4.43bn.