Despite reporting a 56% drop in second-quarter earnings from a year ago, Shell Plc Chief Executive Wael Sawan said Thursday the London-based energy company plans to invest as much as $15 billion in renewables over the next three years, or about $4 billion to $5 billion a year, including $500 million in electric-vehicle (EV) charging and $1 billion in biofuels in the next 12 months.
The company reported second-quarter financial results Thursday below analysts’ expectations, Reuters said, including earnings that plummeted to $5 billion from $11.5 billion in profits a year ago when the war in the Ukraine affected supplies and pushed up gas prices, boosting Shell’s margins. In the United States a year ago, gas prices soared to over $5 a gallon in many areas.
With gas prices down this year, lower second-quarter sales volumes impacted the company’s earnings. Chevron Corp., Exxon Mobil Corp. and TotalEnergies also reported signification year-over-year profit declines—of 48%, 56% and 49%, respectively—this week, as the companies face comparison with soaring earnings a year ago, Reuters said.
Sawan told the media the company will be selective in the renewable energy investments it makes as it considers shareholders’ interests. It lowered its debt level to $40 billion in the second quarter from $46.4 billion a year ago to provide more value to shareholders. It boosted its dividend to 33 cents per share and lowered its commitment to stock buybacks to $3 billion in shares over the next three months, from $3.6 billion in the first quarter, Reuters said.
Shell remains committed to reducing emissions and will be investing in biofuels and electric-vehicle charging, Sawan said. In the first quarter, on March 31, Shell acquired Volta Inc., a San Francisco-based electric-vehicle charger maker, for $169 million, but Shell executives didn’t mention the acquisition during their second-quarter remarks.
In an Investor Day presentation in June, Shell executives said the company has 30,000 public charge points installed and expects to increase the number to 70,000 by 2025 and to 200,000 by 2030, according to slides of the Investor Day presentation. In 2021, Shell said it would increase its network of EV charging points to 500,000 globally by 2025, according to the Guardian.
Shell also is developing a low-carbon hydrogen business, Sawan said. Its strategy in renewable generation involves “going into the market and looking for those partners that can hold hands with us” to create more value for shareholders, Shell said.
Chief Financial Officer Sinead Gorman said the company takes a long-term view and invests over decades, not months. It continues to look for investment opportunities in clean energy. “You can see that in EV charge points that we put in place around the country,” she said.
The company’s marketing business saw sales grow to $2.6 billion in the second quarter from $2.4 billion a year ago. Shell said margins increased by $200 million, driven by increased mobility unit margins.
In the United States, Shell launched a Platinum version of its Fuels Rewards program July 17, offering 10-cents-per-gallon savings at the pump and double savings on in-storrewards at its convenience stores.
Houston-based Shell Oil Products is working with Alpharetta, Georgia-based PDI Technologies on the Platinum Status program, which is above Gold Status and provides the greatest savings on fuel. Rewards Members become eligible for Platinum Status after 12 fuel purchases of at least 10 gallons in a three-month period. Filling up with V-Power NiTRO+ Premium Gasoline counts for two fillups, the company said.
On Thursday, Sawan told the media Shell is considering closing as many as 500 sites. “We’re making sure we have the strongest low-carbon assets we can possibly have. This is not static; it’s dynamic,” he said.
In Pennsylvania, Shell has invested take low-carbon gas from the Marcellus Shale and expects to generate $1 billion to $1.5 billion in of earnings before interest, taxes, depreciation and amortization (EBITDA). Sawan noted the location is important as 70% of North American demand is within 700 miles.
In response to a question from the Financial Times about turnover in personnel in its renewables business, Sawan said, the company’s turnover rate is about 3% annually. As it expands in renewables, “We are investing to the tune of $10 billion to $15 billion over the next three years, to $4 billion to $5 billion every single year, making us one of the largest investors in the energy transition.”
Shell said it will consider demand before plunging into investments. DriveOhio announced Equilon/Shell and ABB E-Mobility will receive $177,924 in National Electric Vehicle Infrastructure funds to construct an EV charging station at a site near I-71 off exit 231. This was one of the lowest dollar amounts DriveOhio announced in its first round of NEVI grants, with most recipient teams receiving about $700,000.
Shell reduced its capital expenditure range for the year to $23 billion to $26 billion.
“As we deliver more value with less emissions, we will continue to prioritize share buybacks, given the value that our shares represent,” the company said in its second-quarter announcement.