By Jaime Llinares Taboada


Shell PLC on Thursday reported better-than-expected earnings for the fourth quarter, and said it will launch a share-buyback program of $8.5 billion for the first half of 2022.

The oil-and-gas giant generated adjusted earnings of $6.39 billion in the three months through the end of December, beating the market consensus of $5.22 billion, taken from Vara Research and averaged from 22 analysts' estimates. This was up from $4.13 billion in the third quarter and from $393 million in the fourth quarter of 2020.

Compared with the third quarter, Shell's profits were boosted by liquefied-natural-gas trading and optimization, as well as by realized oil, gas and LNG prices. Adjusted earnings from its integrated gas division more than doubled on quarter, to $4.05 billion, it said.

This was partly offset by lower chemicals and marketing margins. Adjusted earnings from the oil products business fell 54% to $555 million, and the chemicals unit booked a $42 million loss, the company said.

Helped by stronger hydrocarbon demand and prices, Shell's 2021 adjusted earnings jumped to $19.29 billion from $4.85 billion in 2020, surpassing the $16.46 billion achieved in 2019, before the coronavirus pandemic. This was despite total production falling 4% on year.

Net income was $11.46 billion for the quarter and $20.10 billion for the whole year, the company said.

"We delivered very strong financial performance in 2021, and our financial strength and discipline underpin the transformation of our company," Chief Executive Ben van Beurden said.

The company said it is launching a share buyback of $8.5 billion for the first half of 2022, comprising $5.5 billion of proceeds from the Permian divestment and $3.0 billion as part of the capital allocation framework. In addition, Shell declared a quarterly dividend of 24 cents a share, unchanged from the third quarter, and forecast that the payment for the first quarter of 2022 will increase around 4% to 25 cents a share.

Biraj Borkhataria from RBC Capital Markets said in a note that the highlight of the announcement was better-than-expected integrated gas earnings, and that Shell is increasing share buybacks faster than predicted.

Looking ahead, Shell forecast that integrated gas production will fall to 760,000 to 820,000 oil-equivalent barrels a day in the first quarter because of turnaround activities, while LNG volumes will be 7.7 million to 8.3 million metric tons. Upstream production is forecast to be 2.0 million to 2.2 million oil-equivalent barrels a day.

As for oil products, first-quarter sales volumes are forecast at 4.1 million to 5.4 million barrels a day, with refinery utilization rising to 71% to 79%. Similarly, chemicals plant utilization is expected to rise to 78% to 86%, with sales volumes of 3.3 million to 3.7 million tons, the company said.

Shell said that starting in 2022 it will report earnings from its marketing segment and its renewables and energy solutions segment on a standalone basis. At the moment, those segments are reported under the oil products and integrated gas divisions, respectively.

Shares at 0801 GMT were up 1.5% at 1,961 pence.


Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT


(END) Dow Jones Newswires

02-03-22 0340ET