Shell posts $6.2 billion profit, announces $3.5 billion share buyback

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People pump gas into their vehicles at a Shell gas station on October 2, 2023 in Alhambra, California.

Frederic J. Brown | Afp | Getty Images

British oil giant Shell on Thursday reported a profit of $6.2 billion for the third quarter, roughly in line with estimates, as the company benefited from higher oil prices and refining margins.

Analysts were expecting adjusted revenue of $6.48 billion, according to a consensus compiled by LSEG.

Profit was higher than the $5.1 billion in the second quarter, but marked a sharp decline from the $9.45 billion reported a year ago, when the conflict between Russia and Ukraine supported oil and gas prices.

The company also announced buybacks of $3.5 billion to be made over the next three months. Shell CEO Wael Sawan said the $6.5 billion set for the second half of the year was now “significantly higher” than the $5 billion announced in June.

“Shell delivered another quarter of strong operational and financial performance, seizing opportunities in volatile commodity markets,” Sawan said in a statement.

Free cash flow fell from $12.1 billion in the second quarter to $7.5 billion. Cash capital expenditure rose from $5.1 billion to $5.6 billion.

Energy majors are coming off the back of a year for profits, which was boosted by rising fossil fuel prices.

Oil prices have risen sharply again through the third quarter of 2023 on the back of factors including supply cuts by Saudi Arabia and Russia, while the International Energy Agency has say oil markets will remain on edge amid the escalation of conflict in the Middle East.

BP on Tuesday posted a year-on-year drop in third-quarter profit from $8.15 billion to $3.293 billion, below analysts’ estimates, although the French rate Total energy slightly better than last week.

While BP said its quiet quarterly performance was partly due to weakness in gas marketing and trading, Shell said performance in its integrated gas division was stable, noting favorable trading.

Meanwhile Shell’s renewable solutions and energy division reported a loss of $67 million, which it attributed to weaker margins due to seasonal effects and lower trading. Capital expenditure was $659 million.

The results come amid criticism of the pace of the company’s decarbonisation programme, including from groups of its own shareholders.

Shell confirmed last week that it will cut 200 positions within its low carbon solutions unit by 2024.

London-listed shares of Shell opened about 1% higher on Thursday.

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