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Shell (SHEL) Breezes Past Q2 Earnings Estimates, Ups Buyback
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Europe’s largest oil company Shell plc (SHEL - Free Report) reported second-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $3.06. The bottom line came in above the Zacks Consensus Estimate of $2.91 and surged from the year-earlier quarter’s earnings of $1.42 per ADS, backed by stronger commodity prices and refining margins.
Shell’s revenues of $103.1 billion were up significantly from second-quarter 2021 sales of $61.8 billion.
Meanwhile, Shell repurchased $5.5 billion of shares in the second quarter. The energy group also announced that it completed the $8.5 billion buyback program scheduled for the first half of 2022 on Jul 5. Moreover, SHEL expects another $6 billion of repurchases for the third quarter.
Shell PLC Unsponsored ADR Price, Consensus and EPS Surprise
Upstream: The segment recorded a profit of $4.9 billion (excluding items) during the quarter, nearly doubling from $2.5 billion (adjusted) reported in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.
At $101.42 per barrel, the group’s worldwide realized liquids prices were 62.1% above the year-earlier levels, while natural gas prices more than tripled.
Shell’s upstream volumes averaged 1,917 thousand oil-equivalent barrels per day (MBOE/d), down 13.1% from the year-ago period, mainly due to the impact of divestments and scheduled maintenance. Liquids production totaled 1,325 thousand barrels per day (down 14.8% year over year) and natural gas output came in at 3,428 million standard cubic feet per day (down 9%).
Chemicals and Products: In this segment, the London-based super-major reported an adjusted income of $2 billion, 105.8% higher than the year-ago period. The highly favorable comparison was due to strong refining margins and a tight leash on operating expenses, which offset lower chemicals profitability. Meanwhile, refinery utilization came in at 69%, down from 76% during the June-end quarter of 2021.
Integrated Gas: The unit reported an adjusted income of $3.8 billion, jumping from $1.6 billion in the April-June quarter of 2021. Results were primarily impacted by higher LNG liquefaction volumes, which increased 2.3% from the second quarter of 2021 to 7.66 million tons. However, total Integrated Gas production fell 5.1% year over year to 944 MBOE/d.
Marketing: The segment recorded an income of $751 million (excluding items) during the quarter compared to the year-ago earnings of $955 million due to a dip in lubricants margins.
Renewables and Energy Solutions: The segment showed adjusted income of $725 million, turning around from the year-ago loss of $13 million. The performance boost reflects higher trading and optimisation margins for gas and power. However, external power sales were down 11.5% year over year to 54 terawatt hours, while piped gas sales fell 4.6% to 188 terawatt hours.
Financial Performance
As of Jun 30, 2022, the Zacks Rank #2 (Buy) company had $39 billion in cash and $83.7 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 19.3%, down from 27.7% a year ago.
During the quarter under review, Shell generated cash flow from operations of $18.7 billion, returned $1.9 billion to its shareholders through dividends and spent $6.7 billion on capital projects.
The company’s cash flow from operations increased 47.9% from the year-earlier level. Meanwhile, the group raked in $12.5 billion in free cash flow during the second quarter compared to $9.7 billion a year ago.
Guidance
Shell expects third-quarter 2022 upstream volumes of 1,750-1,950 MBOE/d, while Integrated Gas production is expected between 890 MBOE/d and 940 MBOE/d. The company also foresees marketing sales volumes of 2,350-2,850 thousand barrels per day, Chemicals sales volumes of 3,100-3,600 thousand tons and refinery utilization in the range of 90-98% were also guided.
Important Energy Releases So Far
Let’s take a look at some key energy releases so far.
Schlumberger (SLB - Free Report) , the largest oilfield contractor, announced second-quarter earnings of 50 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 40 cents. SLB recorded total revenues of $6.8 billion, outpacing the Zacks Consensus Estimate by 7.8%.
Schlumberger’s strong quarterly earnings resulted from higher sales of exploration data licensing and strong drilling activities in land and offshore resources in North America and the international market. In further good news for investors, SLB revised its 2022 revenue outlook upward to at least $27 billion. This reflects that it expects year-over-year revenue growth in the high-teens compared with the prior projection of mid-teens. Increased participation in growth of drilling and completion activities across the world brightened Schlumberger’s outlook.
Smaller rival Halliburton (HAL - Free Report) reported second-quarter adjusted net income per share of 49 cents, surpassing the Zacks Consensus Estimate of 45 cents and well above the year-ago quarter profit of 26 cents. HAL’s outperformance reflects stronger-than-expected profit from both its divisions.
Meanwhile, revenues of $5.1 billion were 36.9% higher than the corresponding period of 2021 and came ahead of the Zacks Consensus Estimate of $4.7 billion. North American revenues rose 54.6% year over year to $2.4 billion, while revenues from Halliburton’s international operations were up 23.9% from the year-ago period to $2.6 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
Energy infrastructure provider Kinder Morgan (KMI - Free Report) reported second-quarter 2022 adjusted earnings per share of 27 cents, in line with the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s 23 cents per share. Contributions from natural gas pipelines and Products Pipelines primarily aided KMI’s results.
Kinder Morgan projects net income attributable to the midstream player for 2022 at $2.5 billion. For this year, it expects a dividend of $1.11 per share, suggesting an increase of 3% from the prior year. For 2022, KMI forecasts DCF generation of $4.7 billion and adjusted EBITDA of $7.2 billion.
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Shell (SHEL) Breezes Past Q2 Earnings Estimates, Ups Buyback
Europe’s largest oil company Shell plc (SHEL - Free Report) reported second-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $3.06. The bottom line came in above the Zacks Consensus Estimate of $2.91 and surged from the year-earlier quarter’s earnings of $1.42 per ADS, backed by stronger commodity prices and refining margins.
Shell’s revenues of $103.1 billion were up significantly from second-quarter 2021 sales of $61.8 billion.
Meanwhile, Shell repurchased $5.5 billion of shares in the second quarter. The energy group also announced that it completed the $8.5 billion buyback program scheduled for the first half of 2022 on Jul 5. Moreover, SHEL expects another $6 billion of repurchases for the third quarter.
Shell PLC Unsponsored ADR Price, Consensus and EPS Surprise
Shell PLC Unsponsored ADR price-consensus-eps-surprise-chart | Shell PLC Unsponsored ADR Quote
Inside Shell’s Segments
Upstream: The segment recorded a profit of $4.9 billion (excluding items) during the quarter, nearly doubling from $2.5 billion (adjusted) reported in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.
At $101.42 per barrel, the group’s worldwide realized liquids prices were 62.1% above the year-earlier levels, while natural gas prices more than tripled.
Shell’s upstream volumes averaged 1,917 thousand oil-equivalent barrels per day (MBOE/d), down 13.1% from the year-ago period, mainly due to the impact of divestments and scheduled maintenance. Liquids production totaled 1,325 thousand barrels per day (down 14.8% year over year) and natural gas output came in at 3,428 million standard cubic feet per day (down 9%).
Chemicals and Products: In this segment, the London-based super-major reported an adjusted income of $2 billion, 105.8% higher than the year-ago period. The highly favorable comparison was due to strong refining margins and a tight leash on operating expenses, which offset lower chemicals profitability. Meanwhile, refinery utilization came in at 69%, down from 76% during the June-end quarter of 2021.
Integrated Gas: The unit reported an adjusted income of $3.8 billion, jumping from $1.6 billion in the April-June quarter of 2021. Results were primarily impacted by higher LNG liquefaction volumes, which increased 2.3% from the second quarter of 2021 to 7.66 million tons. However, total Integrated Gas production fell 5.1% year over year to 944 MBOE/d.
Marketing: The segment recorded an income of $751 million (excluding items) during the quarter compared to the year-ago earnings of $955 million due to a dip in lubricants margins.
Renewables and Energy Solutions: The segment showed adjusted income of $725 million, turning around from the year-ago loss of $13 million. The performance boost reflects higher trading and optimisation margins for gas and power. However, external power sales were down 11.5% year over year to 54 terawatt hours, while piped gas sales fell 4.6% to 188 terawatt hours.
Financial Performance
As of Jun 30, 2022, the Zacks Rank #2 (Buy) company had $39 billion in cash and $83.7 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 19.3%, down from 27.7% 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 $18.7 billion, returned $1.9 billion to its shareholders through dividends and spent $6.7 billion on capital projects.
The company’s cash flow from operations increased 47.9% from the year-earlier level. Meanwhile, the group raked in $12.5 billion in free cash flow during the second quarter compared to $9.7 billion a year ago.
Guidance
Shell expects third-quarter 2022 upstream volumes of 1,750-1,950 MBOE/d, while Integrated Gas production is expected between 890 MBOE/d and 940 MBOE/d. The company also foresees marketing sales volumes of 2,350-2,850 thousand barrels per day, Chemicals sales volumes of 3,100-3,600 thousand tons and refinery utilization in the range of 90-98% were also guided.
Important Energy Releases So Far
Let’s take a look at some key energy releases so far.
Schlumberger (SLB - Free Report) , the largest oilfield contractor, announced second-quarter earnings of 50 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 40 cents. SLB recorded total revenues of $6.8 billion, outpacing the Zacks Consensus Estimate by 7.8%.
Schlumberger’s strong quarterly earnings resulted from higher sales of exploration data licensing and strong drilling activities in land and offshore resources in North America and the international market. In further good news for investors, SLB revised its 2022 revenue outlook upward to at least $27 billion. This reflects that it expects year-over-year revenue growth in the high-teens compared with the prior projection of mid-teens. Increased participation in growth of drilling and completion activities across the world brightened Schlumberger’s outlook.
Smaller rival Halliburton (HAL - Free Report) reported second-quarter adjusted net income per share of 49 cents, surpassing the Zacks Consensus Estimate of 45 cents and well above the year-ago quarter profit of 26 cents. HAL’s outperformance reflects stronger-than-expected profit from both its divisions.
Meanwhile, revenues of $5.1 billion were 36.9% higher than the corresponding period of 2021 and came ahead of the Zacks Consensus Estimate of $4.7 billion. North American revenues rose 54.6% year over year to $2.4 billion, while revenues from Halliburton’s international operations were up 23.9% from the year-ago period to $2.6 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
Energy infrastructure provider Kinder Morgan (KMI - Free Report) reported second-quarter 2022 adjusted earnings per share of 27 cents, in line with the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s 23 cents per share. Contributions from natural gas pipelines and Products Pipelines primarily aided KMI’s results.
Kinder Morgan projects net income attributable to the midstream player for 2022 at $2.5 billion. For this year, it expects a dividend of $1.11 per share, suggesting an increase of 3% from the prior year. For 2022, KMI forecasts DCF generation of $4.7 billion and adjusted EBITDA of $7.2 billion.
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