Shell share price rises on back-to-back record earnings

Shell rises on record earnings

Shell is firing on cylinders after the company beat expectations this morning, delivering a second consecutive quarter of record profits as it reaped the rewards from higher oil and gas prices as well as a spike in refining margins.

This has led to a significant step up in cashflow, generating more than enough for Shell to pay down debt and funnel more cash to shareholders.

Gearing has fallen below 20% for the first time since late 2015 after debt was slashed by almost $20 billion over the past year. That has also seen it finally cut the billions in debt that was loaded onto its balance sheet when it bought gas giant BG back in 2016.

Meanwhile, Shell has stepped-up shareholder returns this morning after launching a $6 billion share buyback for the coming quarter. That is up from the $4.3 billion returned on average through buybacks during the first two quarters of 2022.

Plus, Shell said it plans to keep distributing over 30% of operating cashflow going forward, signalling that it will continue to prioritise returning cash to investors.

CEO Ben van Beurden admitted that it is a ‘challenge’ to allocate the influx of cash into the business, but said it plans to keep buying back shares so long as they are undervalued and suggested we could see another uptick in buybacks in the fourth quarter.

Where next for Shell share price?

Shell share price rose steadily across the first halt of the year, forming a series of higher highs and higher lows before reach an all time high of 2440p. From there the price fell lower to 1910p.

After hitting a low of 1908p on July 14^th, the Shell share price is extending its rebound, rising above the 20 sma, which combined with the bullish RSI keeps buyers hopeful of further upside.

Resistance can be seen at 2180p the 50 sma and a close over here could help the stock towards 2230p the late June high. Above here buyers could gain traction towards the June all time high of 2440p.

On the flip side, failure to break above the 50 sma could see the price fall back towards 2050p the 20 sma and March high.

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