Shell Reports $6.2 billion Profit for Third Quarter, Announces Share Buyback
Alhambra, California – British oil giant Shell announced on Thursday that it had recorded a profit of $6.2 billion for the third quarter, in line with expectations. The company attributed its strong financial performance to higher oil prices and refining margins.
Analysts had predicted adjusted earnings of $6.48 billion, according to an LSEG-compiled consensus. While the reported profit is higher than the $5.1 billion of the second quarter, it represents a significant drop from the $9.45 billion reported during the same period last year, when the Russia-Ukraine conflict boosted oil and gas prices.
In addition to the profit announcement, Shell revealed plans for a $3.5 billion share buyback to be carried out over the next three months. This follows the company’s previous announcement in June of a $5 billion share buyback for the second half of the year. Shell CEO Wael Sawan commented that the new buyback plan was “well in excess” of the initial amount.
“Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets,” said Sawan in a statement.
Despite the positive profit figures, Shell saw a decline in free cash flow from $12.1 billion in the second quarter to $7.5 billion. Cash capital expenditure also increased from $5.1 billion to $5.6 billion.
This announcement comes at a time when energy majors are experiencing a record year for profits, fueled by soaring fossil fuel prices. Oil prices have continued to rise sharply throughout the third quarter of 2023, driven by factors such as supply cuts by Saudi Arabia and Russia, as well as the escalation in conflicts in the Middle East, according to the International Energy Agency.
On Tuesday, fellow oil company BP reported a year-on-year decline in third-quarter profit from $8.15 billion to $3.293 billion, falling short of analyst estimates. However, France’s TotalEnergies slightly outperformed expectations last week.
While BP attributed its muted quarterly performance to weaknesses in gas marketing and trading, Shell highlighted the steady performance of its integrated gas division and favorable trading in its financial results.
However, Shell’s renewables and energy solutions division reported a loss of $67 million, which the company attributed to weaker margins due to seasonal effects and lower trading. Capital expenditure for this segment amounted to $659 million.
The release of these results coincides with criticism of Shell’s decarbonization program, including from its shareholders. Last week, the company confirmed plans to cut 200 positions within its low-carbon solutions unit in 2024.
Despite these challenges, London-listed shares of Shell opened approximately 1% higher on Thursday, reflecting investor confidence in the company’s overall performance.