Shell and TotalEnergies Experience Drop in Q2 Profits Due to Falling Oil and Gas Prices
Oil giants Shell and TotalEnergies have both reported a significant decrease in their second-quarter profits, as oil and gas prices continue to plummet. Shell’s adjusted earnings for the period between April and June were $5.1 billion, which is less than half of what the company reported during the same period last year. Similarly, TotalEnergies saw a 49% drop in adjusted net income, reporting $5 billion compared to the previous year.
The energy industry has been grappling with the impact of decreasing oil and gas prices on their profitability. While these companies enjoyed high profits in the past year, the current decline in prices has taken a toll on their earnings. In fact, the combined dividends and share buybacks from the five biggest Western energy firms exceeded $100 billion in 2022. However, shareholders may not experience the same windfall as last year, given the decrease in natural gas and crude oil prices.
To cope with these challenging market conditions, Shell has announced plans to buy back $3 billion worth of shares, marking a significant 50% decrease from the same period last year. Meanwhile, TotalEnergies will maintain its share buybacks at $2 billion, keeping it unchanged from the previous year. Additionally, Shell has plans to distribute “at least” another $2.5 billion via share buybacks after its third-quarter results.
Wael Sawan, CEO of Shell, remains optimistic about Europe’s positive position heading into winter, attributing it to renewable energy generation and high natural gas storage levels. However, it is worth noting that Shell still prioritizes oil and gas production over renewables, which reflects a wider trend in the industry.
In terms of investments, Shell dedicated more funds to oil and natural gas exploration, with a total of $3.9 billion invested in the first half of the year. In comparison, the company’s investment in renewables and energy solutions amounted to $996 million, highlighting its continued focus on traditional energy sources.
Looking forward, the International Energy Agency predicts that global coal consumption in 2023 will remain near record levels, driven by Asian demand. These projections will be closely watched by industry players such as Chevron, ExxonMobil, and BP, who are set to release their financial results in the coming days.
