Oil and gas giant (O&G) Shell plc has posted a fall in year-on-year profits reflecting an easing of the energy crisis and a reduction in prices.
On 2 February 2023, Shell recorded its “highest-ever” annual profits from 2022 amounting to £32.2 billion. A year later, the O&G firm has seen its profits reduce by £9.9 billion to £22.3 billion ($28.2 billion).
The primary reason for the drop in profits was due to “lower realised oil and gas prices, lower volumes, and lower refining margins and partly offset by higher LNG trading and optimisation margins”.
Indeed, analysis conducted by Cornwall Insight, and previously covered on Current±, has shown that the energy crisis appears to be stabilising with the UK now on a trajectory of recovery, as long as the escalation in the Red Sea does not hinder energy prices.
This stabilisation of energy prices is expected to impact many energy generators’ financial results with demand having also reduced over the course of 2023 because of the energy crisis.
Turning our attention back to the Shell financial results, a noteworthy statistic is that the organisation’s cash flow from operations in 2023 surged to a staggering £42 billion – the second highest in the company’s history.
Shareholders also gained £18 billion across 2023 with Shell now also set to raise its dividend by 4% with a £2.7 billion buyback programme set to be established in the coming months.
The Energy Profits Levy – the O&G windfall tax announced in May 2022 – was expanded and extended by Rishi Sunak, the UK’s Prime Minister. This taxation increased from 25% to 35% from 1 January 2023 and will come to an end on 31 March 2028 as opposed to December 2025.