The Shell logo is displayed outside a petrol station in Radstock in Somerset, England, on Feb. 17, 2024.
Matt Cardy | Getty Images News | Getty Images
British oil giant Shell on Thursday posted a small year-on-year drop in third-quarter profit as a sharp decline in crude 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 analyst expectations of $5.3 billion, according to estimates compiled by LSEG.
Shell posted adjusted earnings of $6.3 billion in the second quarter and $6.2 billion in the third quarter of 2023.
Shell said it will buy back a further $3.5 billion of its shares over the next three months, while holding its dividend unchanged at 34 cents per share.
It marks the 12th consecutive quarter that Shell has announced at least $3 billion in buybacks, Sinead Gorman, chief financial officer at Shell, said in a video presentation.
“This quarter we have delivered another strong set of results despite a less favorable macro environment,” Gorman said.
“This was driven by solid operational performance across our portfolio, continuing the momentum we’ve built over recent quarters,” she added.
Shares of the London-listed firm rose 1.5% on Thursday morning.
Weaker oil prices
Oil prices tumbled over 17% in the third quarter amid concerns over the outlook for global oil demand.
Ahead of the firm’s third-quarter earnings, Shell warned that refining profit margins had dropped by more than 28% on a quarterly basis, while trading results for its chemicals and oil products division were expected to be lower.
Shell said net debt came in at $35.2 billion at the end of the third quarter, down from $40.5 billion when compared to the same period last year.
Shell said free cash flow rose to $10.83 billion in the third quarter, up from $7.5 billion in the same period a year earlier.
Cash capital expenditure, meanwhile, came in at $4.95 billion, down from $5.65 billion in the third quarter of 2023.
Earlier this week, British rival BP posted its weakest quarterly earnings in nearly four years, weighed down by lower refining margins.
BP reported underlying replacement cost profit, used as a proxy for net profit, of $2.3 billion for the third quarter. That beat analyst expectations — but reflected a steep drop when compared to the same period a year earlier.
Clean energy investments
Shell faced criticism on Thursday from activist shareholder group Follow This, which highlighted that the oil major’s third-quarter earnings show investments in the renewables and energy solutions division fell to 8% of the firm’s overall capital expenditure — down from 9% in the second quarter.
The decrease in clean energy investments comes after Shell weakened its 2030 carbon emissions reduction target in March.
Shell said in an energy transition strategy update at the time that it would water down its near-term carbon emissions cuts, while maintaining its pledge to become a net-zero company by the middle of the century.
“By continuing to bet on fossil fuel expansion, the board of Shell jeopardizes the future of the company,” Mark van Baal, founder of Follow This, said in a statement on Thursday.
“Fossil fuel growth delays the transition and increases the risk of a carbon lock-in, which will make it harder to pivot to renewables each year,” he added.
Shell did not immediately respond to a request for comment.
