The Shell logo is displayed outside a gas station in Radstock in Somerset, England, on February 17, 2024.
Matt Cardy | Getty Images News | Getty Images
British oil giant coincidence The company on Thursday reported a slight decline in third-quarter profit year over year, as a sharp decline in crude oil prices and lower refining margins were partially offset by higher gas sales.
The energy company reported adjusted earnings of $6 billion for the July-September period, beating analysts' expectations of $5.3 billion, according to estimates compiled by LSEG.
Shell reported adjusted earnings of $6.3 billion in the second quarter and $6.2 billion in the third quarter of 2023.
Shell said it would buy back an additional $3.5 billion of its shares over the next three months, while keeping its dividend unchanged at 34 cents per share.
This marks the 12th consecutive quarter in which Shell has announced buybacks worth at least $3 billion, Sinead Gorman, Shell's chief financial officer, said in a video presentation.
“This quarter we delivered another strong set of results despite the less favorable macro environment,” Gorman said.
“This was driven by strong operational performance across our portfolio, continuing the momentum we have built over recent quarters,” she added.
Net debt reached $35.2 billion at the end of the third quarter, down from $40.5 billion compared to the same period last year.
Shares of the London-listed company rose 0.8% on Thursday morning.
“Strong stance”
Shell said free cash flow in the third quarter rose to $10.83 billion, up from $7.5 billion in the same period a year earlier.
Meanwhile, cash capital spending was $4.95 billion, down from $5.65 billion in the third quarter of 2023.
Maurizio Caroli, an energy analyst at wealth management firm Quilter Cheviot, said Shell's third-quarter results were “significantly better than expectations on almost every level” and show that the company “continues to implement its strategy of portfolio rationalization, cost reductions and operational improvements.” “.
“In addition, Shell is the world number one in LNG, a company it built from scratch since the 1970s, with great foresight,” Karolyi said, noting that LNG is the only sector in the oil and gas industry that is expected to grow. It grows. significantly over the next decade.
“As such, the company has put itself in a strong position to weather any fluctuations in commodity prices and take advantage of competitors’ struggles,” he added.
Earlier this week, British rival BP posted its weakest quarterly profit in nearly four years, hurt by falling refining margins.
BP reported core replacement cost earnings, used as a proxy for net profit, of $2.3 billion for the third quarter. This exceeded analysts' expectations – but reflects a sharp decline compared to the same period the previous year.
Oil prices fell more than 17% in the third quarter amid concerns about the outlook for global oil demand.
Clean energy investments
Shell faced criticism on Thursday from activist shareholder group Follow This, which highlighted that the oil major's third-quarter earnings showed investments in its renewable energy and energy solutions division fell to 8% of the company's total capital expenditures – down from 9% in the second quarter. .
The decline in clean energy investments comes after Shell weakened its 2030 carbon emissions reduction target in March.
Shell said in an update to its energy transition strategy at the time that it would moderate its reductions in carbon emissions in the near term, while maintaining its pledge to become a net zero company by mid-century.
“By continuing to bet on fossil fuel expansion, Shell’s board is putting the company’s future at risk,” Mark van Baal, founder of Follow This, said in a statement.
He added: “The growth of fossil fuels delays the transition and increases the risk of carbon capture, which will make it difficult to focus on renewable energy sources every year.”
Shell said on Thursday that the company has seen some “significant developments” in its renewable energy and energy solutions businesses in recent months.
“One example is Norway, where our joint venture Northern Lights has now completed construction. The project is ready to start permanently storing carbon dioxide to help European industries decarbonize,” Gorman said.
“Last week, we announced the acquisition of a combined cycle power plant in Rhode Island, where demand is expected to increase due to growing electricity-related decarbonization efforts,” she added.
Shell previously said it intends to decarbonize profitably and plans to invest between $10 billion and $15 billion in low-carbon energy solutions between 2023 and the end of next year.
These low-carbon investments include electric vehicle charging, biofuels, renewable energy, and hydrogen and carbon capture and storage.
