Shell and TotalEnergies profits cut in half by lower oil prices

Shell and TotalEnergies have reported a steep drop in second-quarter profits, as oil and gas prices fell from record highs reached following Russia’s full-scale invasion of Ukraine 17 months ago.

The sharp decline in earnings from two of the world’s biggest oil companies signals the end of a run of record-setting results for energy companies.

Shell, Europe’s largest oil company by revenue, reported adjusted earnings of $5.1 billion during the April-to-June period — less than half the $11.5 billion it reported a year ago. The result was also driven by lower production volumes and lower margins in its oil refining business, Shell said in a statement Thursday. The company’s stock fell 2% in London.

French oil company Total

(TOT)Energies posted adjusted net income of $5 billion Thursday, a 49% drop on the same period a year ago.

Energy companies enjoyed bumper profits last year off the back of soaring oil and gas prices, and shareholders were rewarded handsomely.

Payouts from dividends and share buybacks across the five biggest Western energy firms — BP

(BP), Chevron

(CVX), ExxonMobil, Shell and TotalEnergies — exceeded $100 billion in 2022.

Prices for European natural gas and Brent crude, the global oil benchmark, are now lower than they were before the start of the Ukraine war in February 2022, meaning that shareholders may not enjoy the same windfall as last year.

While TotalEnergies kept share buybacks due for the quarter unchanged from a year ago at $2 billion, Shell said it would buy back $3 billion worth of shares — down 50% for the same period last year.

The company added that, subject to board approval, it would distribute “at least” another $2.5 billion following its third-quarter results. That’s down from $4 billion for the third quarter of last year.

“Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment,” CEO Wael Sawan said.

Chevron and ExxonMobil will report results Friday, with BP reporting next Tuesday.

— This is a developing story and will be updated.