Shell announces $4bn share buyback as Q3 profits beat expectations

Oil giant Shell announced a $4bn share buyback on Thursday as it posted better-than-expected third-quarter profits.

Adjusted earnings rose to $9.5bn from $4.1bn in the third quarter a year earlier, but were down from the record $11.5bn posted in the second quarter of the year. Analysts had been expecting net earnings of $9bn.

Shell said this was a "robust performance in a turbulent economic environment", with lower crude prices and higher gas prices compared with the second quarter. The firm also pointed to lower refining margins in the quarter, due to a recovery in global product supply to meet demand.

Shell also announced a $4bn share buyback, expected to be completed by the fourth quarter results announcement, and said it plans to lift the dividend per share by 15% for the fourth quarter.

Chief executive Ben van Beurden said: "We are delivering robust results at a time of ongoing volatility in global energy markets.

"We continue to strengthen Shell's portfolio through disciplined investment and transform the company for a low-carbon future. At the same time we are working closely with governments and customers to address their short and long-term energy needs."

At 0940 BST, the shares were up 3% at 2,370p.

Laith Khalaf, AJ Bell head of investment analysis, said: "Given it now plans to reward shareholders with a windfall of their own through its pledge to increase the fourth quarter dividend, calls for a further levy on Shell’s bumper profits are only likely to increase.

"In fairness, chief executive Ben van Beurden has been self-aware enough to acknowledge this fact and he could argue he has to reward shareholders who, after all, saw the first cut in the dividend since the Second World War during the pandemic.

"The optics of paying out more to investors aren’t too clever when many households are really struggling with their energy bills.

"Shell isn’t making as much money as it was in the second quarter when it posted record figures, though the company’s new habit of trailing its numbers a week or so early means there’s nothing here to really alarm investors.

"The oil and gas industry tends to be highly cyclical and things may not be as good again for Shell as they were in 2022 for some time. Oil prices are coming under some pressure as the economy slows and gas prices in Europe have fallen as storage levels increase – though whether this will last once winter really hits is open to question."

Neil Wilson, chief market analyst at Markets.com, said: "Shell is delivering stunning results this year, but the question is one of sustainability and tax. How long can it keep up this kind of performance? Probably longer than people realise chiefly as oil prices are likely to remain elevated for a prolonged time. Two, these are the kind of numbers that put a target on your back for politicians looking to fill a black hole in public finances.

"Politically it’s expedient - will Sunak see another windfall tax as the answer to win back Red Wall voters struggling with the cost of living? "