Status: 07/28/2022 3:50 p.m
The energy groups Shell, Total and Repsol presented record results for the second quarter. The oil prices, which have risen sharply as a result of the Ukraine war, have flushed billions into their coffers.
The European energy giants Shell, TotalEnergies and Repsol achieved record results in the second quarter thanks to higher oil prices – they were able to increase their previous year’s figures many times over.
Europe’s largest oil company, Shell, posted an adjusted profit of $11.5 billion last quarter. The group surpassed the record profit of 9.1 billion dollars from the first quarter. The group offset lower liquefied natural gas (LNG) trading results with higher prices and refining 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 this today. The program is expected to be completed by the third quarter. In the first half of the year, the oil multinational bought back shares worth $8.5 billion.
TotalEnergies with record value
While Shell shareholders reacted positively to the announcement of billions in share buybacks and pushed the price up by two percent, investors in the French energy group Total were not happy about the prospect. Total shares lost three and a half percent 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 increased prices and high margins in the refinery business. Despite another write-down on a stake in a Russian gas producer, profit rose by 158 percent to $5.7 billion. A year ago it was just 2.2 billion. Adjusted for special effects, earnings almost tripled to a record $9.8 billion. The profit was slightly higher than 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 of the year, the company achieved a net profit of just over 2.5 billion euros. That was a good twice as much as a year earlier. Almost half of the profit came from the book value of stocks that Repsol holds as a strategic reserve for Spain.
Together with the 2.5 billion euros that the group earned last year, the losses from 2019 and 2020 could be more and more offset, Repsol announced today in Madrid. At that time, the corona pandemic and asset adjustments to achieve net-zero emissions caused total losses of more than 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 oil currently costs more than $108, compared to $75 a year ago. Record results are also expected from energy giants ExxonMobil, Chevron and BP, which are set to release their numbers in the coming days. The energy companies’ billions in profits are likely to fuel the debate about introducing an excess profit tax. With such a special tax, among other things, the profits of companies that are currently benefiting from the high energy prices should be skimmed off.
As recently as May, the British government introduced a special tax on the above-average profits in the oil and gas industry as a result of the rise in commodity prices, which also affects Shell. With the energy levy of 25 percent, the British government wants to take five billion pounds to finance social spending.
Also in countries like Belgium and Spain there should be a special taxation for energy companies. In Germany, the introduction of an excess profit tax 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.