Oil giant Shell posts sharp drop in second-quarter profit on weaker commodity prices
General view of the Shell logo.
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LONDON — British oil giant Shell on Thursday reported a sharp year-on-year drop in second-quarter profit, citing lower fossil fuel prices and refining margins.
Shell posted adjusted earnings of $5.1 billion for the three-month period through to the end of June, missing analyst expectations of $6 billion, according to estimates collated by Refinitiv.
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The company reported adjusted earnings of $11.5 billion during the same period of last year and $9.6 billion for the first three months of 2023.
Shell increased its quarterly dividend by 15% to $0.33 per share, as previously communicated in mid-June. It also announced $3 billion in share buybacks, a program it expects to complete over the next three months.
“At the end of the day, we have a balanced energy transition strategy. What we are looking to do is to be able to do the right things for now and for the future, both for our shareholders and for the planet,” Shell CEO Wael Sawan told CNBC’s “Squawk Box Europe” on Thursday.
“We are focused on creating more value with less emissions,” Sawan said. “And what that means is we will continue to pull all the levers to drive further value growth in the organization, while at the same time we will continue to meet our aggressive emissions reduction targets — both for our own emissions, as well as for our customers.”
Shares of the London-listed oil major slipped 2% on Thursday morning.
“The company had previously set the scene with downgrades in its earnings estimates to reflect a more normalised trading environment, but it has still missed expectations with today’s results,” said Stuart Lamont, investment manager at RBC Brewin Dolphin.
“The share buyback programme and increased dividend are good news for shareholders, but will inevitably come with questions attached in the current environment,” he added.
‘Softening oil and gas environment’
French oil major TotalEnergies also reported weaker-than-expected earnings on Thursday, posting second-quarter adjusted net income of $5 billion. It reflects a 49% drop from the bumper profit that the company logged during the same period of last year.
TotalEnergies CEO Patrick Pouyanne said the firm’s “robust” earnings came during a “favorable but softening oil and gas environment.”
Norwegian oil and gas giant Equinor had on Wednesday reported a 57% decline in year-on-year second-quarter profit as oil and gas prices slipped from last year’s high levels.
The West’s five largest oil companies raked in combined profits of nearly $200 billion in 2022 as fossil fuel prices soared following Russia’s full-scale invasion of Ukraine. For its part, Shell reported annual record profit of almost $40 billion for the full-year 2022.
Oil and gas prices were under pressure in the first half of the year, however, as global economic jitters outweighed supply-demand fundamentals.
The impact of lower commodity prices is likely to be mirrored across the energy industry, with Britain’s BP and U.S. rivals Exxon Mobil and Chevron all scheduled to report earnings in the coming days.
‘Activist noise’
Shell has been criticized for backing away from new oil output cuts in recent months. The company announced ahead of its Capital Markets Day conference in New York last month that it would maintain oil production at current levels through to the end of the decade, as part of a bid to generate more cash from its oil division.
It simultaneously reiterated its commitment to climate targets, saying it was making “good progress” toward becoming a net-zero business by 2050.
The burning of fossil fuels — such as oil and gas — is the chief driver of the climate emergency.
Shell on Thursday reduced its capital expenditure range for 2023 to $23 billion to $26 billion, down from a first-quarter estimate of between $23 billion to $27 billion for the full-year.
Asked whether the firm’s plans to invest up to $15 billion over the next three years on low-carbon projects would be enough to quell pressure from climate activists, Shell’s Sawan replied, “We need to do what is right for the company and what we believe is going to be a balanced energy transition.”
“What we look at is opportunities to be able to deploy that capital in a way that we can demonstrate returns to our shareholders. That is the limit of what we see at the moment,” he added.
“If new opportunities emerge that give us line of sight towards the sorts of returns that companies like ours should be going after, then absolutely we will grow our capital, but we cannot grow it on the basis of activist noise. That is not the right approach.”
The Shell annual general meeting in May was repeatedly disrupted by climate protesters, reflecting a palpable sense of frustration during the Big Oil proxy voting season.
JackRabbit, the maker of pint-sized electric microbikes, is back with a new product designed to quickly recharge their batteries from pure, uncut photons mainlined into an e-bike directly from the sun. In true independent charging form, the Solar Charging Kit from JackRabbit keeps riders rolling even when there’s not a convenient AC outlet in sight.
Unveiled this week, the Solar Charging Kit consists of a single folding solar panel and a tiny voltage converter that is configured to output 42.0V, which is the exact voltage required by JackRabbit’s little e-bike batteries. There’s also an added USB-A and a USB-C charging port for powering other devices in addition to charging JackRabbit batteries.
“This Solar Charging Kit plugs directly into your bike,” explained the company, “letting you recharge without needing an outlet, but with a speed comparable to the charger that comes with the OG/OG2 (42V, 2A).”
That would mean the panel outputs around 80W of solar power, which the company says can recharge its batteries in just three hours. That fairly quick recharging speed is helped by the fact that JackRabbit’s batteries are a mere 151 Wh, or around a third of the size of most e-bike batteries.
If that sounds small, then you’re right – it is. But JackRabbit is all about going micro, offering barely 25 lb rideables that are easy to store and bring on adventures, even when they aren’t actually being ridden.
With small batteries that fit under the 160Wh limit for many airlines in the US, the batteries can be quickly charged and taken to the widest number of locations. And for riders that want to go further than a single 10-mile (16-km) battery will allow, extra batteries are small enough to fit a pants pocket. The company also offers much larger Rangebuster batteries, though they won’t pass by TSA and make it onto an airplane in your personal item.
It sounds like the Solar Chargking Kit should be able to charge up JackRabbit’s large RangeBuster batteries, though likely in more than three hours.
The $349 Solar Charging Kit is a bit pricier than building something similar yourself, but it’s also safer and more convenient than hacking together your own battery charger since it’s designed to work with JackRabbit’s batteries right out of the box.
Technically it’s only inteded for JackRabbit’s micro e-bikes (themselves technically seated scooters, even if they look and feel more like a typical bike), but it’d probably work for just about any 36V e-bike that requires 42.0V to charge.
This isn’t the first time we’ve seen solar charging kits for electric bikes, and it’s a trend that is certainly appreciated by outdoors and camping enthusiasts, festival goers, or anyone who finds themself and their bike spending extended periods in the great, sunny outdoors.
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Solar generated 11% of EU electricity in 2024, overtaking coal which fell below 10% for the first time, according to the European Electricity Review published today by think tank Ember.
EU gas generation declined for the fifth year in a row, and total fossil generation fell to a historic low.
“Fossil fuels are losing their grip on EU energy,” said Dr Chris Rosslowe, senior analyst and lead author of the report. “At the start of the European Green Deal in 2019, few thought the EU’s energy transition could be where it is today; wind and solar are pushing coal to the margins and forcing gas into structural decline.”
The European Electricity Review published today by global energy think tank Ember provides the first comprehensive overview of the EU power system in 2024. It analyzes full-year electricity generation and demand data for 2024 in all EU-27 countries to understand the region’s progress in transitioning from fossil fuels to clean electricity.
Wind and solar continue their meteoric rise in the EU
The EU power sector is undergoing a deep transformation spurred on by the European Green Deal. Solar generation (11%) overtook coal (10%) for the first time in 2024, as wind (17%) generated more electricity than gas (16%) for the second year in a row.
Strong solar growth, combined with a recovery of hydropower, pushed the share of renewables to nearly half of EU power generation (47%). Fossil fuels generated 29% of the EU’s electricity in 2024. In 2019, before the Green Deal, fossil fuels provided 39% of EU electricity, while renewables provided 34%.
Solar is growing in every EU country and more than half now have either no coal power or a share below 5% in their power mix. Coal has fallen from being the EU’s third-largest power source in 2019 to the sixth-largest in 2024, bringing the end into sight for the dirtiest fossil fuel. EU gas generation also declined for the fifth year in a row (-6%) despite a very small rebound in power demand (+1%).
The EU is reaping the benefits of reduced fossil fuel dependency
The surge in wind and solar generation has reduced the EU’s reliance on imported fossil fuels and its exposure to volatile prices since the energy crisis. Ember’s analysis found that without new wind and solar capacity added over the last five years, the EU would have imported an additional 92 billion cubic meters of fossil gas and 55 million tonnes of coal, costing €59 billion.
“While the EU’s electricity transition has moved faster than anyone expected in the last five years, further progress cannot be taken for granted,” continued Rosslowe. “Delivery needs to be accelerated particularly in the wind sector, which has faced unique challenges and a widening delivery gap. Between now and 2030, annual wind additions need to more than double compared to 2024 levels. However, the achievements of the past five years should instil confidence that, with continued drive and commitment, challenges can be overcome and a more secure energy future be achieved.”
Walburga Hemetsberger, CEO of SolarPower Europe said: “This milestone is about more than just climate action; it is a cornerstone of European energy security and industrial competitiveness. Renewables are steadily pushing fossil fuels to the margins, with solar leading the way. We now need more flexibility to kick-in, making sure the energy system is adapting to new realities: more storage and more smart electrification in heating, transport and industries.”
Read more: China installed a record capacity of solar and wind in 2024 – in numbers
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