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Shell to Pay $2 Billion in Windfall Taxes. Why the Stock Is Rising. -- Barrons.com

Barron's · 01/06/2023 05:06
By Brian Swint

Shell, Europe's largest oil and gas company, said it will have to pay about $2 billion in additional taxes in the fourth quarter, but still sees strong earnings from natural gas trading for the period.

The impact of the windfall taxes won't affect adjusted earnings and will have a limited effect on cash because of the timing of the payments, the company said in a market update on Friday. Shares advanced 1.5% in early London trading.

Oil companies such as Shell (ticker: SHEL) raked in record earnings in 2022 after energy prices spiked in the wake of Russia's invasion of Ukraine. That led governments to enforce windfall taxes to help pay for measures designed to cushion households from higher oil and gas costs.

Prices for fuel have since fallen back, but prospects for oil majors remain upbeat. It was one of the few sectors to flourish in 2022--Shell shares rose about 40% over the year.

Oil prices were stable on Friday. West Texas Intermediate, the U.S. benchmark, was at $73.65. Brent Crude, the international standard, also traded at $78.65.

Trading of liquefied natural gas was a highlight for Shell in the fourth quarter. Profits from the unit will be significantly higher than in the third quarter, despite a drop in output from plant outages, the company said.

Wael Sawan took over as chief executive officer of Shell on Jan. 1, replacing Ben van Beurden. In October, the company said it plans on increasing its fourth-quarter dividend by 15%. It reports earnings on Feb. 2.

Write to Brian Swint at brian.swint@barrons.com

(END) Dow Jones Newswires

January 06, 2023 05:06 ET (10:06 GMT)

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