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Shell reported adjusted earnings of $6.2bn in the third quarter and increased share buybacks as robust oil prices and higher refining margins helped drive profits.
The earnings, which were in line with market estimates, were down about a third from $9.5bn reported last year at the height of the energy crisis, but beat the $4.1bn in the same period of 2021.
The company left its quarterly dividend unchanged but announced $3.5bn in share buybacks for the next three months, up from $3bn in the previous quarter, lifting total announced shareholder distributions for 2023 to approximately $23bn, Shell’s chief executive Wael Sawan said.
Shell, like most of its rivals, has used bumper profits from the past 18 months to embark on a massive share repurchasing scheme. Last year, it distributed $26bn to shareholders including $18bn in share buybacks, representing almost 10 per cent of its market value.
Since taking over as chief executive in January, Sawan has sought to improve financial performance by simplifying Shell’s approach to the energy transition. That process has involved streamlining the senior management team, re-emphasising the oil and gas business and trimming less profitable parts of the company’s low-carbon portfolio.
“We continue to simplify our portfolio while delivering more value with less emissions,” he said.
Shell said that most of its low carbon activities in the third quarter were lossmaking.
The biggest contributor to group profits was, once again, Shell’s integrated gas division, which reported earnings of $2.5bn despite a 9 per cent drop in production volumes from the previous quarter due to planned maintenance in Trinidad and Tobago and at its Prelude facility in Australia.
Shell was aided by a “favourable” result from its gas traders, it said. In contrast, BP’s gas trading division had struggled in the third quarter dragging down group-wide earnings.
Higher oil production, particularly from Shell’s deepwater fields, and higher oil prices, helped lift profits in Shell’s upstream division to $2.2bn, from $1.7bn in the second quarter.
“Quite boring, but in a good way,” said Biraj Borkhataria, an analyst at RBC Capital Markets, noting that earnings in upstream and oil products trading were both stronger than expected.
In a pre-recorded video message, Sinead Gorman, chief financial officer, highlighted the operational performance of Shell’s gas-to-liquids facility in Qatar and the start up of a new gas platform in Malaysia.
During the quarter, Shell had also opened its largest global charging hub for electric vehicles, with 258 charge points at a single site in China, and started producing biofuels in Brazil through its joint venture Raizen, she said.
Shell’s share price rose 1 per cent to £26.82 in early morning trade on Thursday.