(Alliance News) - Shell PLC on Thursday reported soaring annual profit, on surging commodity prices, potentially intensifying calls for a windfall tax to be imposed on oil majors.

The company also announced another buyback of USD4 billion, after recently completing a repurchase programme of the same size.

Shares in the company were 1.9% higher at 2,412.20 pence each in London on Thursday morning.

The company rounded off 2022 with a fourth-quarter revenue hike of 12% to USD101.20 billion, from USD90.22 billion in 2021.

Pretax profit edged by a more modest 1.1% on-year to USD16.44 billion from USD16.27 billion, as total expenditure was 15% higher at USD84.75 billion.

Basic earnings per share fell slightly to USD1.47 each, from USD1.49.

Fourth-quarter adjusted earnings, however, jumped 54% to USD9.81 billion from USD6.39 billion. Adjusted EPS rose to USD1.39 from USD0.83.

For the whole of 2022, adjusted earnings more than doubled to a record USD39.87 billion from USD19.29 billion. Adjusted EPS surged to USD5.43 from USD2.49.

Shell made a yearly pretax profit of USD64.81 billion, more than doubling from USD29.83 billion. Revenue for 2022 soared 42% to USD386.20 billion from USD272.66 billion.

It was a year when Shell benefitted from skyrocketing oil prices. The price of Brent topped the USD130 mark in the wake of Russia's invasion of Ukraine, and as demand for the commodity picked up as Covid curbs across the globe eased.

A barrel of Brent traded at USD83.21 on Thursday morning, London time.

Realised prices in its Upstream arm were slightly weaker quarter-on-quarter in the final three months of 2022, amounting to USD82.42 a barrel, from USD93.02 a barrel in the third quarter. It was markedly higher than the USD73.49 reported a year earlier, however.

"Our results in [the fourth quarter] and across the full year demonstrate the strength of Shell's differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world," new Chief Executive Wael Sawan said.

"We believe that Shell is well positioned to be the trusted partner through the energy transition. As we continue to put our Powering Progress strategy into action, we will build on our core strengths, further simplify the organisation and focus on performance."

The company declared a dividend of USD0.29 for its fourth quarter, up from USD0.24 a year earlier; this brings the full-year dividend to USD1.04 up from USD0.89. Quarter-on-quarter, the final payout for the year was lifted 15% from USD0.25.

Shell will also buy back another USD4 billion. That buyback is expected to be completed by the time it announces results for the first quarter of 2023.

Though not quite as chunky as the USD75 billion repurchase programme announced by Chevron Corp earlier in 2023, Shell's buyback plan and soaring profit may intensify tax calls for the company. Chevron's buyback does not have a fixed expiration date.

Former Shell CEO Ben van Beurden back in October said the governments should "probably" tax energy firms, as many consumers struggle with a rising cost of living. van Beurden left at the end of 2022.

Since joining, new CEO Sawan has moved to simplify the company, reducing the size of its executive committee.

On Monday, in one of Sawan's first public acts as CEO, Shell said it will combine its Upstream division with its Integrated Gas arm, and its Downstream unit with its renewables offering, effective July 1.

The new Integrated Gas & Upstream arm will be led by current Upstream Director Zoe Yujnovich. The Integrated Gas business had come with Shell's acquisition of BG Group back in 2016.

Downstream & Renewables will be fronted by current Downstream Director Huibert Vigeveno.

Strategy, Sustainability & Corporate Relations will be discontinued. Its current Director Ed Daniels will leave Shell's executive committee.

Looking to 2023, Shell on Thursday earmarked cash capital expenditure amounting to USD23 billion to USD27 billion. For 2022, capex amounted to USD24.83 billion.

Shell's earnings glut in 2022 contrasts with the tough 2020 endured by the company, due to Covid-19 sapping demand for oil. Revenue that year amounted to USD180.54 billion. It fell to a pretax loss of USD26.97 billion in 2020, from profit of USD25.49 billion in 2019.

By Eric Cunha, Alliance News news editor

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.