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Shell (SHEL) Q4 Earnings Beat Estimates on Soaring Oil
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Europe’s largest oil company Shell plc (SHEL - Free Report) reported fourth-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.66. The bottom line came in above the Zacks Consensus Estimate of $1.40 and surged from the year-earlier quarter’s earnings of 10 cents per ADS, backed by stronger commodity prices.
Shell’s revenues of $90.2 billion essentially doubled from fourth-quarter 2020 sales of $45 billion.
Meanwhile, Shell repurchased $1.7 billion of shares in the fourth quarter. The energy group also announced plans to buy back $8.5 billion worth of shares in the first half of this year, including the recent pledge to return $5.5 billion from the Permian sale proceeds.
Shell declared a fourth-quarter payout of 24 cents per share and expects to hike it by approximately 4% next quarter.
With the current conditions auguring well for the integrated energy stocks, Shell follows peers ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) in benefiting from skyrocketing oil and natural gas prices.
ExxonMobil’s fourth-quarter 2021 earnings per share of $2.05 — excluding identified items — beat the Zacks Consensus Estimate by nine cents. The better-than-expected earnings were due to improved realized oil and natural gas prices as well as higher refining and chemical margins. The results reflect a significant recovery in fuel demand compared to last year, thanks to the rolling out of coronavirus vaccines at a massive scale.
The company’s upstream segment reported quarterly earnings of $6.1 billion against a loss of $18.5 billion in the year-ago comparable quarter. Meanwhile, the downstream unit recorded a profit of $1.5 billion, turning around from the loss of $1.2 billion a year ago. ExxonMobil’s chemical business recorded a $1.9-billion profit, skyrocketing from earnings of $691 million in the year-ago quarter.
Smaller rival Chevron reported adjusted fourth-quarter earnings per share of $2.56, missing the Zacks Consensus Estimate of $3.11 on weaker-than-expected performance from both segments. Precisely, income from the Upstream and the Downstream units totaled $5.2 billion and $760 million, respectively, below their Zacks Consensus Estimate of $5.3 billion and $1 billion.
Keeping the bottom-line disappointment aside, CVX recorded $9.5 billion in cash flow from operations compared to just $2.3 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was a record $6.9 billion. Chevron's cash flow for the full-year 2021 was $29.2 billion, up 175.5% from 2020. Further, Chevron paid $10.2 billion in dividends and bought back $1.4 billion worth of its shares.
Inside Shell’s Segments
Upstream: The segment recorded a profit of $2.8 billion (excluding items) during the quarter, turning around from a loss of $748 million (adjusted) reported in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.
At $73.49 per barrel, the group’s worldwide realized liquids prices were 80.3% above the year-earlier levels while natural gas prices more than tripled.
Shell’s upstream volumes averaged 2,161 thousand oil-equivalent barrels per day (MBOE/d), down 8.9% from the year-ago period mainly due to the impact of divestments. Liquids production totaled 1,458 thousand barrels per day (down 5.1% year over year) and natural gas output came in at 4,080 million standard cubic feet per day (down 15.7%).
Oil Products: In this segment, the London-based super-major reported adjusted income of $555 million, 2.8% higher than the year-ago period. The favorable comparison was due to the return to profitability for refining and trading, which offset lower sales volumes and refinery processing. Meanwhile, refinery utilization came in at 68%, down from 71% during the December-end quarter of 2020.
Integrated Gas: The unit reported an adjusted income of $4.1 billion, jumping from $1.1 billion in the October-December quarter of 2020. Results were primarily impacted by higher realized commodity prices and strong contribution from Shell’s LNG portfolio. On a somewhat bearish note, LNG liquefaction volumes decreased 3.3% from the fourth quarter of 2020 to 7.94 million tons. Meanwhile, total Integrated Gas production fell 1.6% year over year to 927 MBOE/d.
Chemicals: The segment recorded a loss of $42 million (excluding items) during the quarter, compared to the year-ago earnings of $381 million due to lower realized margins in base chemicals, unplanned turnaround activities and a fall in joint venture income.
Financial Performance
As of Dec 31, 2021, the Zacks Rank #2 (Buy) company had $37 billion in cash and $89.1 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 23.1%, down from 32.2% a year ago.
During the quarter under review, Shell generated cash flow from operations of $8.2 billion, returned $1.8 billion to its shareholders through dividends and spent $6.2 billion cash on capital projects.
The company’s cash flow from operations increased 30% from the year-earlier level. Meanwhile, the group raked in $10.7 billion in free cash flow during the fourth quarter compared to just $882 million a year ago.
Guidance
Shell expects first-quarter 2022 upstream volumes of 2,000-2,200 MBOE/d, while Integrated Gas production is expected between 760 MBOE/d and 820 MBOE/d (pulled down by turnaround activities). The company also foresees Oil Products sales volumes of 4,100-5,400 thousand barrels per day, Chemicals sales volumes of 3,300-3,700 thousand tons and refinery utilization in the range of 71-79% were also guided.
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Shell (SHEL) Q4 Earnings Beat Estimates on Soaring Oil
Europe’s largest oil company Shell plc (SHEL - Free Report) reported fourth-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.66. The bottom line came in above the Zacks Consensus Estimate of $1.40 and surged from the year-earlier quarter’s earnings of 10 cents per ADS, backed by stronger commodity prices.
Shell’s revenues of $90.2 billion essentially doubled from fourth-quarter 2020 sales of $45 billion.
Meanwhile, Shell repurchased $1.7 billion of shares in the fourth quarter. The energy group also announced plans to buy back $8.5 billion worth of shares in the first half of this year, including the recent pledge to return $5.5 billion from the Permian sale proceeds.
Shell declared a fourth-quarter payout of 24 cents per share and expects to hike it by approximately 4% next quarter.
Shell PLC Price, Consensus and EPS Surprise
Shell PLC price-consensus-eps-surprise-chart | Shell PLC Quote
Big Oil Earnings Update
With the current conditions auguring well for the integrated energy stocks, Shell follows peers ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report) in benefiting from skyrocketing oil and natural gas prices.
ExxonMobil’s fourth-quarter 2021 earnings per share of $2.05 — excluding identified items — beat the Zacks Consensus Estimate by nine cents. The better-than-expected earnings were due to improved realized oil and natural gas prices as well as higher refining and chemical margins. The results reflect a significant recovery in fuel demand compared to last year, thanks to the rolling out of coronavirus vaccines at a massive scale.
The company’s upstream segment reported quarterly earnings of $6.1 billion against a loss of $18.5 billion in the year-ago comparable quarter. Meanwhile, the downstream unit recorded a profit of $1.5 billion, turning around from the loss of $1.2 billion a year ago. ExxonMobil’s chemical business recorded a $1.9-billion profit, skyrocketing from earnings of $691 million in the year-ago quarter.
Smaller rival Chevron reported adjusted fourth-quarter earnings per share of $2.56, missing the Zacks Consensus Estimate of $3.11 on weaker-than-expected performance from both segments. Precisely, income from the Upstream and the Downstream units totaled $5.2 billion and $760 million, respectively, below their Zacks Consensus Estimate of $5.3 billion and $1 billion.
Keeping the bottom-line disappointment aside, CVX recorded $9.5 billion in cash flow from operations compared to just $2.3 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was a record $6.9 billion. Chevron's cash flow for the full-year 2021 was $29.2 billion, up 175.5% from 2020. Further, Chevron paid $10.2 billion in dividends and bought back $1.4 billion worth of its shares.
Inside Shell’s Segments
Upstream: The segment recorded a profit of $2.8 billion (excluding items) during the quarter, turning around from a loss of $748 million (adjusted) reported in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.
At $73.49 per barrel, the group’s worldwide realized liquids prices were 80.3% above the year-earlier levels while natural gas prices more than tripled.
Shell’s upstream volumes averaged 2,161 thousand oil-equivalent barrels per day (MBOE/d), down 8.9% from the year-ago period mainly due to the impact of divestments. Liquids production totaled 1,458 thousand barrels per day (down 5.1% year over year) and natural gas output came in at 4,080 million standard cubic feet per day (down 15.7%).
Oil Products: In this segment, the London-based super-major reported adjusted income of $555 million, 2.8% higher than the year-ago period. The favorable comparison was due to the return to profitability for refining and trading, which offset lower sales volumes and refinery processing. Meanwhile, refinery utilization came in at 68%, down from 71% during the December-end quarter of 2020.
Integrated Gas: The unit reported an adjusted income of $4.1 billion, jumping from $1.1 billion in the October-December quarter of 2020. Results were primarily impacted by higher realized commodity prices and strong contribution from Shell’s LNG portfolio. On a somewhat bearish note, LNG liquefaction volumes decreased 3.3% from the fourth quarter of 2020 to 7.94 million tons. Meanwhile, total Integrated Gas production fell 1.6% year over year to 927 MBOE/d.
Chemicals: The segment recorded a loss of $42 million (excluding items) during the quarter, compared to the year-ago earnings of $381 million due to lower realized margins in base chemicals, unplanned turnaround activities and a fall in joint venture income.
Financial Performance
As of Dec 31, 2021, the Zacks Rank #2 (Buy) company had $37 billion in cash and $89.1 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 23.1%, down from 32.2% a year ago.
You can see the complete list of today’s Zacks #1 Rank stocks here.
During the quarter under review, Shell generated cash flow from operations of $8.2 billion, returned $1.8 billion to its shareholders through dividends and spent $6.2 billion cash on capital projects.
The company’s cash flow from operations increased 30% from the year-earlier level. Meanwhile, the group raked in $10.7 billion in free cash flow during the fourth quarter compared to just $882 million a year ago.
Guidance
Shell expects first-quarter 2022 upstream volumes of 2,000-2,200 MBOE/d, while Integrated Gas production is expected between 760 MBOE/d and 820 MBOE/d (pulled down by turnaround activities). The company also foresees Oil Products sales volumes of 4,100-5,400 thousand barrels per day, Chemicals sales volumes of 3,300-3,700 thousand tons and refinery utilization in the range of 71-79% were also guided.