By Ron Bousso and Shadia Nasralla
LONDON (Reuters) - Shell posted record results on Thursday, with a $11.5 billion second-quarter profit smashing the mark it set only three months ago, lifted by strong gas trading and a tripling of refining profit.
The company also announced a $6 billion share buyback programme for the current quarter but did not raise its dividend of 25 cents per share. It said shareholder returns would remain "in excess of 30% of cash flow from operating activities".
A rapid recovery in demand after the end of pandemic lockdowns and a surge in energy prices, driven by Russia's invasion of Ukraine, have boosted profits for energy companies after a two-year slump.
Shell bought back $8.5 billion of shares in the first half of 2022 and the new programme is significantly higher than forecast.
"The strong oil price backdrop has helped Shell deliver a blockbuster set of results. The dividend may have remained the same, but the share buyback programme is positive news for shareholders," said Stuart Lamont, investment manager at Brewin Dolphin.
Shell shares were up 1.6% at 1115 GMT, compared with a 1.3% gain for the broader European energy index.
French rival TotalEnergies also reported stellar results on Thursday, with a record profit of $9.8 billion for the quarter, and accelerated its buyback programme.
Norway's Equinor raised its special dividend and boosted share buybacks on Wednesday.
U.S. rivals Exxon Mobil and Chevron report results on Friday.
Oil and gas prices remained elevated in the quarter, with benchmark Brent crude averaging about $114 a barrel. Benchmark European natural gas prices and global liquefied natural gas (LNG) average prices were at record highs in the quarter.
Shell's second-quarter adjusted earnings rose to $11.47 billion, above the $11 billion forecast by analysts in a poll provided by the company. That was up from $5.5 billion a year earlier and $9.1 billion in the first quarter of 2022.
Shell's strong results reflected higher energy prices and refining margins, as well as strong gas and power trading, the company said, but were partly offset by lower LNG trading results.
Refining profit margins tripled in the quarter to $28 a barrel. They have weakened substantially in recent weeks on signs of easing gasoline demand in the United States and Asia.
Shell said its refinery utilisation would increase to 90-98% in the third quarter, compared with 84% in the second quarter.
Its oil and gas production in the second quarter was down 2% from the previous quarter at 2.9 million barrels of oil equivalent per day (boepd).
Shell's LNG liquefaction volumes stood at 7.66 million tonnes in the second quarter, down from 8 million in the previous three months. Volumes are expected to fall to between 6.9 million and 7.5 million tonnes in the third quarter because of strikes at its Australian Prelude site and planned maintenance.
Shell also said it had received a $165 million dividend payment in April from the Russian Sakhalin-2 oil and gas joint venture that it intends to exit.
The surge in cash generation was used to further reduce Shell's debt, which stood at $46.4 billion at the end of June, down from $48.5 billion three months earlier. Its debt-to-capitalisation ratio, or gearing, declined to 19.3%.
(Reporting by Ron Bousso and Shadia Nasralla; Editing by Jason Neely, Mark Potter and David Goodman)