Supermajor Shell has been tipped to replicate the eye-watering profits it reported earlier this year.
The London-listed energy giant will publish its second quarter financial results tomorrow against the ongoing backdrop of high oil and gas prices.
Analysts are predicting “another monster set of cash flow figures”, with Big Oil across the board poised for record profits in Q2, driven by high energy prices.
In May, Shell reported record quarterly results for the first three months of 2022, with takings of £8.6 billion and revenue of around £67bn.
That was despite it suffering a £3.1bn hit over its exit from Russia, following the country’s invasion of Ukraine.
Shell’s gigantic Q1 profits, as well as those of its peers, fuelled calls for a windfall tax on oil and gas producers.
Just over a couple of weeks later the then chancellor Rishi Sunak announced the energy profits levy.
Shell Q2 results
There are likely to be calls for government to go further again, with the likes of Shell, BP and TotalEnergies expected to announced whopping profits in the coming days.
Norwegian energy giant Equinor has already set the pace, unveiling first-half adjusted earnings of £29.2bn.
Biraj Borkhataria, associate director of European research at Royal Bank of Canada, said: “We expect Shell to report another monster set of cash flow figures, following some extremely tough comps (comparatives) in Q1.“
Why are oil companies’ takings so high?
At the turn of the year, oil and gas markets were already beginning to tighten.
A myriad of factors including countries emerging from lockdown, a cold snap in Asia, and record low wind speeds combined to send gas prices through the roof in 2021.
Brent crude was also in a far healthier state than the previous year, when lockdowns and the subsequent industry downturn caused the price to plummet.
Vladimir Putin’s attack on Ukraine and the economic sanctions from western governments that followed simply served to exacerbate the problem.
In February, oil crashed through the $100 a barrel mark for the first time since 2014, and has remained around that point or higher since.
John Moore, senior investment manager at Brewin Dolphin, said: “Shell, along with the other oil majors, is expected to post an impressive set of results this quarter. The rising oil price in the first half of the year has been the obvious influence, intensified by the sanctions on Russia following its invasion of Ukraine.
“It hasn’t all been plain sailing, though: oil majors had to sell off their interests in Russia, the previous set of results attracted political attention, and there have been issues with the supply of liquified natural gas. Nevertheless, Shell has managed to shrug off many of these challenges and is likely to deliver some positive news for shareholders.”
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