Status: 07/28/2022 3:50 p.m.
The energy groups Shell, Total and Repsol presented record results for the second quarter. Oil prices, which have risen sharply following the war in Ukraine, have poured billions into their coffers.
European energy giants Shell, TotalEnergies and Repsol achieved record results in the second quarter thanks to higher oil prices – they were able to multiply by several figures the figures of the previous year.
Europe’s largest oil company, Shell, posted an adjusted profit of $11.5 billion last quarter. The group surpassed record first-quarter profit of $9.1 billion. The group compensated for lower liquefied natural gas (LNG) trading results with higher refining prices and margins, as well as better gas and electricity trading results.
Shell now plans to spend $6 billion on another share buyback program in addition to paying a dividend of 25 cents per share. The company announced it today. The program is expected to be completed in the third quarter. In the first half of the year, the multinational oil company bought back shares worth $8.5 billion.
TotalEnergies with record value
While Shell shareholders reacted positively to news of billions in share buybacks and pushed the price up 2%, investors in French energy group Total were unhappy with the prospect. Total shares lost 3.5% on the Paris Stock Exchange. According to Jefferies analyst Giacomo Romeo, investors are disappointed that the share buyback program has not been increased.
Instead, TotalEnergies announced it would buy back more shares in the third quarter for up to $2 billion. The group had earned significantly more in the second quarter thanks to sharply rising prices and high margins in the refining activity. Despite a further writedown on a stake in a Russian gas producer, profit rose 158% to $5.7 billion. A year ago, it was only 2.2 billion. Adjusted for special effects, earnings nearly tripled to a record $9.8 billion. The profit was slightly higher than the experts had expected.
Spanish oil company makes billions in profit
And even at the Spanish oil company Repsol, the cash register rang thanks to the sharp rise in oil prices. In the first half, the company made a net profit of just over 2.5 billion euros. It was a good twice as much as a year earlier. Nearly half of the profits came from the book value of stocks that Repsol holds as a strategic reserve for Spain.
With the 2.5 billion euros the group earned last year, the losses of 2019 and 2020 could be increasingly made up for, Repsol announced today in Madrid. At that time, the corona pandemic and asset adjustments to achieve net zero emissions caused total losses of over seven billion euros.
Special tax for energy companies
Many oil companies such as Shell have benefited from the sharp rise in oil prices. A barrel of Brent crude currently costs more than $108, up from $75 a year ago. Record results are also expected from energy giants ExxonMobil, Chevron and BP, which are expected to release their figures in the coming days. The billions in profits of energy companies should fuel the debate on the introduction of an excess profits tax. With such a special tax, among other things, the profits of companies that are currently profiting from high energy prices should be skimmed.
As recently as May, the UK government introduced a special tax on above-average profits in the oil and gas industry due to rising commodity prices, which is also affecting Shell. With the energy tax of 25%, the British government wants to raise five billion pounds to finance social spending.
Also in countries like Belgium and Spain there should be special taxation for energy companies. In Germany, the introduction of a tax on excess profits has already been debated, but the coalition is divided on the issue. Green leader Ricarda Lang explained that such an excess profit tax is a logical step. In May, Federal Finance Minister Christian Lindner (FDP) rejected the introduction of a special levy.