Shell PLC reported its second-quarter results last Thursday, with earnings of approximately $5.1 billion for the quarter, down a whopping 56% from $11.6 billion last year.
Earnings were also down from $9.6 billion in the first quarter.
“Our financial results were impacted by lower commodity prices, planned maintenance,” said Wael Sawan, CEO of Shell PLC during the company’s second-quarter results presentation webcast.
The British energy company says that its lower earnings followed lower oil and gas prices globally, which have cooled significantly since a surge in rates following Russia’s invasion of Ukraine.
Despite the drop from last year and the previous quarter, Sawan maintained that Shell continues to deliver record earnings: “In the first half of this year, we delivered our second-highest adjusted earnings in a decade…better than in the same period in 2014…when the average Brent oil price stood at $110 per barrel, compared with $80 per barrel this year.”
The company’s adjusted earnings before interest, taxes, depreciation and amortization clocked in at $14.4 billion for the second quarter, down from $21.4 billion in the first quarter.
The drop comes after a historically-strong year for Shell in 2022, when the company’s profits doubled. Shell announced a 15% dividend increase because of its performance last year, which the company said it intends to deliver on.
Following the results, Shell announced it will be lowering its capital expenditure (capex) for 2023.
“We are lowering our 2023 cash capex outlook to $23-26 billion, as we continue to demonstrate discipline in our capital spend,” said Sinead Gorman, chief financial officer at Shell.
Shell was not the only oil and gas company that reported a drop in its second-quarter earnings. French-based energy company TotalEnergies also reported a 49% drop in earnings from last year.
Canadian retailer and c-store operator, Alimentation Couche-Tard, announced in March that it would purchase some of TotalEnergies’ European gas stations in a $3.3 billion deal, which will be reflected in future results.
As for the slip in profits last quarter, TotalEnergies CEO Patrick Pouyanne also faulted a “softening oil and gas environment” last quarter, mimicking the sentiments of Shell’s CEO.
"We will continue more value, with less emissions, not through words, but through actions," ended Sawan.