Radstock, England – Oil giant Shell reported stronger-than-expected first-quarter profits on Thursday, attributing the growth to higher refining margins and robust oil trading. The company’s adjusted earnings of $7.7 billion exceeded analyst expectations of $6.5 billion for the first three months of the year, according to an LSEG-compiled consensus.
Despite the positive results, Shell’s first-quarter profit saw a decline of roughly 20% compared to the same period a year earlier, aligning with a broader trend within the energy industry. CEO Wael Sawan hailed the performance as “another quarter of strong operational and financial results,” showcasing the company’s resilience amidst challenging market conditions.
In response to the earnings report, Shell unveiled a $3.5 billion share buyback program set to be completed over the next three months. While the company’s dividend remains unchanged, its shares have surged by nearly 10% year-to-date, reflecting investor confidence in Shell’s strategic direction and financial outlook.
A year earlier, Shell had posted adjusted earnings of $9.6 billion for the same period and $7.3 billion for the final three months of 2023, indicating a shift in profitability over time. The company’s performance is part of a larger narrative within the oil and gas industry, with prominent players like Exxon Mobil, Chevron, TotalEnergies, and Equinor all reporting significant year-on-year profit declines in the first quarter.
The oil and gas majors had experienced record profits in 2022 following Russia’s invasion of Ukraine, but have since faced challenges due to plummeting gas prices in Europe. Factors such as mild winter weather and an oversupply of gas have contributed to a more than 45% decline in spot prices in the region over the past year, impacting the earnings of major companies like Shell.
As Shell continues to navigate a rapidly evolving energy landscape, its British rival BP is gearing up to release its first-quarter earnings on May 7, setting the stage for further insights into the industry’s financial performance for the period. With market volatility and external factors influencing the sector, companies like Shell are adapting their strategies to remain competitive and resilient in the face of shifting dynamics.