Shell, one of the leading energy companies in the Western hemisphere, reported a 34% annual drop in third-quarter (Q3) profits, amounting to $6.2 billion, due to a cooling in energy prices. Despite this setback, the company managed to partially offset the decline through robust trading in liquefied natural gas (LNG) and a strategic share buyback initiative. In pre-market trading, Shell’s shares saw a 2% increase.
The company announced that it will maintain its dividend at $0.331 per share. Additionally, it unveiled plans for a share buyback program totaling $3.5 billion over the next three months, a notable increase from the previous quarter’s $2.7 billion allocation. Shell’s third-quarter earnings report encapsulates the overall trend observed among top energy firms in the West, all of which have witnessed a significant dip in profits compared to the previous year. This downturn follows a period of heightened oil and gas prices, driven by geopolitical events such as Russia’s invasion of Ukraine.
In contrast to its competitor BP, whose gas trading results weighed heavily on quarterly profits, Shell attributed its relative resilience to “favorable” LNG trading outcomes, surpassing performance in the second quarter. However, the company continued to grapple with operational challenges in its flagship LNG division, impacting overall production levels. Output in the Integrated Gas division dropped by 9% from the preceding quarter, primarily due to maintenance activities at the 3.6-million metric ton per year Prelude floating LNG production facility situated off the coast of Australia. On a positive note, production in the Upstream division saw a 3% increase from the previous quarter, reaching 1.75 million barrels of oil equivalent per day (boed).
Shell’s CEO, Wael Sawan, emphasized the company’s commitment to streamlining its portfolio while concurrently delivering enhanced value with reduced emissions. In a strategic move, the group revised its 2023 capital spending target, narrowing it to a range of $23 billion to $25 billion, down from the previously stated range of $23 billion to $26 billion. Notably, a substantial portion of the Renewables and Energy Solutions segment reported losses in the third quarter.
As of 0829 GMT, Shell’s shares showed a 1.4% increase, surpassing a broader index of European energy firms, which experienced a 0.8% rise. Anticipated maintenance activities at the Prelude facility are slated to resume normal operations in December.
In conclusion, despite the notable dip in the Q3 profits of Shell, the company’s strategic initiatives, including share buybacks and robust LNG trading, position it favorably in the ever-evolving energy landscape.