Europe’s largest oil company Shell plc (RDS-B - Free Report) reported first-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $2.38. The bottom line came in above the Zacks Consensus Estimate of $2.12 and surged from the year-earlier quarter’s earnings of 82 cents per ADS, backed by stronger commodity prices.

Shell’s revenues of $83.2 billion were up significantly from first-quarter 2021 sales of $59.1 billion.

Meanwhile, Shell repurchased $3.5 billion of shares in the first quarter. The energy group also announced that it has already brought back shares worth $4 billion of the total $8.5 billion scheduled for the first half of 2022. The remaining $4.5 billion will be completed before SHEL comes out with second-quarter earnings.

On another positive note, Shell boosted its quarterly dividend by some 4% to 25 cents per share.
 

Shell PLC Unsponsored ADR Price and EPS Surprise

Shell PLC Unsponsored ADR price-eps-surprise | Shell PLC Unsponsored ADR Quote

Big Oil Earnings Update

While we dig further into Shell’s Q1 numbers, let’s take a look at how the other integrated energy stocks have fared so far.

ExxonMobil’s (XOM - Free Report) first-quarter earnings per share of $2.07 — excluding identified items — missed the Zacks Consensus Estimate of $2.25 but improved from the year-ago profit of 65 cents. The lower-than-expected earnings were owing to a decline in oil equivalent production. This was partially offset by higher commodity prices and improved refining margins.

On a bullish note, surging oil and gas prices allowed XOM to increase its stock repurchase program from $10 billion to $30 billion. The American energy giant has planned to execute the repurchase program through next year. During the quarter under review, ExxonMobil generated a cash flow of $15,081 million from operations and asset divestments.

Smaller peer Chevron (CVX - Free Report) reported adjusted first-quarter earnings per share of $3.36, missing the Zacks Consensus Estimate of $3.44 on weaker-than-expected performance from the downstream segment. Precisely, income from the unit totaled $331 million, below the Zacks Consensus Estimate of $569 million. However, the energy major’s bottom line compared favorably with the year-earlier quarter's earnings of 90 cents on the back of sharply higher commodity prices.

CVX recorded $8.1 billion in cash flow from operations compared to $4.2 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was $6.1 billion. Further, Chevron paid $2.7 billion in dividends and bought back $1.3 billion worth of its shares.

Shell’s continental rival BP plc (BP - Free Report) reported adjusted earnings of $1.92 per ADS on a replacement-cost basis, excluding non-operating items. The bottom line beat the Zacks Consensus Estimate of earnings of $1.41 per share and also rose from 78 cents reported a year ago. The strong quarterly earnings were driven by higher realizations of commodity prices.

 BP announced plans to execute a $2.5-billion share buyback, which is expected to complete before reporting the second-quarter results. The company anticipates buying back $1 billion worth of shares every quarter, considering Brent's crude price at $60 per barrel.
 

Inside Shell’s Segments

Upstream: The segment recorded a profit of $3.5 billion (excluding items) during the quarter, far exceeding the $933 million (adjusted) reported in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.

At $88.63 per barrel, the group’s worldwide realized liquids prices were 60.3% above the year-earlier levels, while natural gas prices more than doubled.

Shell’s upstream volumes averaged 2,025 thousand oil-equivalent barrels per day (MBOE/d), down 14.6% from the year-ago period mainly due to the impact of divestments. Liquids production totaled 1,403 thousand barrels per day (down 9.9% year over year) and natural gas output came in at 3,606 million standard cubic feet per day (down 23.7%).

Chemicals and Products: In this segment, the London-based super-major reported an adjusted income of $1.2 billion, 49.6% higher than the year-ago period. The favorable comparison was due to strong profitability for refining and trading, which offset lower sales volumes and refinery processing. Meanwhile, refinery utilization came in at 71%, edging down from 72% during the March-end quarter of 2021.

Integrated Gas: The unit reported an adjusted income of $4.1 billion, jumping from $1.6 billion in the January-March quarter of 2021. Results were primarily impacted by higher realized commodity prices, somewhat offset by lower production. In particular, LNG liquefaction volumes decreased 2% from the first quarter of 2021 to 8 million tons. Meanwhile, total Integrated Gas production fell 15.2% year over year to 896 MBOE/d.

Marketing: The segment recorded an income of $737 million (excluding items) during the quarter compared to the year-ago earnings of $802 million due to a dip in marketing sales volumes.

Renewables and Energy Solutions: The segment showed an adjusted income of $344 million, turning around from the year-ago loss of $102 million. The performance boost reflects higher trading and optimization margins for gas and power. However, external power sales were down 12.3% year over year to 57 terawatt-hours, while piped gas sales fell 1.5% to 257 terawatt-hours. 

Financial Performance

As of Mar 31, 2022, the Zacks Rank #1 (Strong Buy) company had $38.4 billion in cash and $86 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 21.3%, down from 29.9% a year ago.

During the quarter under review, Shell generated cash flow from operations of $14.8 billion, returned $2 billion to its shareholders through dividends and spent $4.2 billion cash on capital projects.

The company’s cash flow from operations increased 78.6% from the year-earlier level. Meanwhile, the group raked in $10.5 billion in free cash flow during the first quarter compared to $7.7 billion a year ago.

Guidance

Shell expects second-quarter 2022 upstream volumes of 1,750-1,950 MBOE/d (pulled down by Gulf of Mexico maintenance work and gas demand seasonality), while Integrated Gas production is expected between 910 MBOE/d and 960 MBOE/d. The company also foresees marketing sales volumes of 2,300-2,800 thousand barrels per day, Chemicals sales volumes of 3,100-3,500 thousand tons, and refinery utilization in the range of 65-73% were also guided.