Shell reported a 28% decline in first-quarter net profit to $5.58 billion, yet still exceeded analyst expectations, signaling strong operational resilience amid softer energy markets. Despite falling oil prices and lower refining margins compared to the previous year, Shell maintained the pace of its shareholder returns, announcing a $3.5 billion share buyback program for the next three months. This marks the fourteenth consecutive quarter of buybacks at or above $3 billion, setting Shell apart from competitors such as BP, which has scaled back buybacks to focus on strengthening its balance sheet.
Shell’s debt-to-equity ratio, or gearing, stands at 18.7%, significantly healthier than BP’s 25.7%, giving it greater flexibility in capital allocation. CFO Sinead Gorman emphasized that the company views falling share prices as an opportunity to enhance shareholder value through buybacks, particularly because management believes the shares are undervalued.
Adjusted earnings came in at $5.58 billion for the quarter, surpassing the average analyst forecast of $4.96 billion, though down from $7.73 billion a year ago. The market responded positively, with Shell shares rising 2.9% in early trading, outpacing the broader energy index gain of 1.3%.
Earlier this year, Shell outlined plans to increase returns to shareholders while reducing its investment range for the years ahead. The company confirmed its trimmed annual capital expenditure budget of $20–$22 billion for 2024. Additionally, Shell hinted at a potential reevaluation of its chemicals business, though no immediate decisions will be made before the end of the decade. Gorman stated that Shell is taking a measured approach to asset decisions, leaving open the possibility of closures or divestments over the coming years.
Refining margins remained subdued, with an indicative margin of $6.2 per barrel, a drop from $12 per barrel during the same period last year but showing slight recovery from $5.5 in the previous quarter. Brent crude averaged around $75 per barrel in the first quarter, down from approximately $87 a year earlier.
Shell’s gas trading segment remained steady compared to the previous quarter, aided by strategic cargo routing and solid performance in LNG markets. In contrast, BP reported weaker results, citing underperformance in its gas trading operations. Gorman praised Shell’s trading teams for their ability to optimize LNG positioning and capitalize on market dynamics.
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