Shell beats expectations in first quarter with extra $4 billion buyback on cards



Oil major Shell reported a solid financial performance in the first quarter of the year, ahead of analysts’ expectations and supported by its trading operations.

In its latest financials released on Thursday, Shell posted adjusted earnings of $9.65 billion for the three months ended 31 March, 5.5% higher than the $9.13 billion it recorded in same period last year.

The result was ahead of analysts’ consensus expectations of $7.97 billion, according to estimates pooled by Vara Research.

With the results, Shell announced an additional $4 billion share buy-back programme for the second quarter.

“Shell delivered strong results and robust operational performance against a backdrop of ongoing volatility, while continuing to provide vital supplies of secure energy,” chief executive Wael Sawan said.

He added that new buybacks are on the cards: “We will commence a $4 billion share buyback programme for the next three months as part of our commitment to deliver attractive shareholder returns.”

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With the additional buyback, total distributions to shareholders should reach around $12 billion for the first half of this year. The dividend to shareholders was unchanged at $0.2875 per share.

Cash flows from operations in the quarter amounted to $14.2 billion. Free cashflow was $9.92 billion.

Shell maintained its capital expenditure outlook guidance for 2023 unchanged, at $23 billion to $27 billion.

Total oil and gas output reached 970,000 barrels of oil equivalent in the period, 6% above the preceding quarter and also higher than 896,000 boe of March 2022. The company said the quarter-on-quarter increase was related to lower maintenance at its Prelude floating liquefied natural gas project in Australia.

The company said the strong performance of oil and fuel trading in the chemicals division, and of power and pipeline gas trading in the energy solutions divisions, “offset the impact of lower oil and gas prices” in the period.

Shell’s integrated gas portfolio, which includes natural gas and LNG and is the supermajor’s largest business unit, booked $4.91 billion in adjusted earnings for the trimester, down 18% on the last quarter of 2022 owing to the impact of lower market prices.

LNG liquefaction and sales increased slightly against the fourth quarter fo 2022, but declined against the same period of last year. Liquefaction stood at 7.19 million tonnes, and sales at 16.97 million tonnes for January-March.

Adjusted earnings in the upstream business fell 9% quarter on quarter to $2.80 billion, and by 18% against this time last year.

The lower gains were partially offset by a strong performance of Shell’s chemicals and products division, which saw earnings increase 139% quarter on quarter to $1.78 billion as of March. This was also 52% above the first quarter of 2022.

The division includes chemical plants and fuel refineries, fuel and oil trading and oil sands.

Renewables and energy solutions —which includes renewable power generation, power trading and low carbon — posted $389 million in earnings, 33% above the last quarter of 2022.

The performance was supported by “optimisation results due to continued price volatility primarily in European markets”, Shell stated.

The results of all four divisions — integrated gas, upstream, chemicals and renewables — were significantly higher than analysts’ consensus, Redburn noted.