Shell will hand its shareholders $3.5bn in share buybacks even as profits for the last quarter tumbled in line with lower oil and gas market prices.
The oil and gas company said its adjusted profits for the quarter fell to $6.2bn from $9.5bn in the same months last year, broadly in line with the expectations of industry analysts.
Despite the weaker earnings Shell will continue to hand shareholders multibillion-dollar quarterly windfalls. The company will buy back a further $3.5bn worth of shares by the time of its fourth-quarter 2023 results announcement, after a $3bn buyback over the last quarter.
Shell’s chief executive officer, Wael Sawan, said the company would hand shareholders $6.5bn in share buybacks over the second half of the year, “well in excess of the $5bn announced at Capital Markets Day in June”. In total, the company’s shareholder payouts for 2023 stand at $23bn, he said.
“Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets. We continue to simplify our portfolio while delivering more value with less emissions,” he said.
The company reported a record annual profit of $40bn for 2022 after posting better-than-expected profits in the final quarter of last year. The full-year profits were more than double compared with 2021, owing to rocketing oil and gas market prices fuelled by Russia’s invasion of Ukraine. The TUC described the profits – one of the largest in UK corporate history – as “obscene” and prompted calls for tougher windfall taxes.
Global oil and gas market prices have tumbled since last year’s peak. The global oil price averaged $85.80 a barrel in the last quarter, down from an average of about $100.80 in the same quarter of last year as Russia’s attack on Ukraine intensified. The US benchmark gas price fell to an average of $2.61 per million British thermal units in the third quarter, from $7.89 in the same months last year.
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Shell’s share price has hit a record high of £27.63 a share in recent weeks after concerns over the fallout from the Israel-Hamas conflict pushed up the price of oil to more than $92 a barrel. Oil prices have eased back in recent days due to concerns over the global economic outlook, which typically dictates demand for crude. Brent crude was trading at nearly $86 a barrel on Thursday.
