Oil giant Shell (SHEL.L) reported a 34% annual drop in third-quarter profit to $6.2 billion on Thursday as energy prices cooled after soaring last year as markets reacted to geopolitical tensions and concerns about the global economy. The group, which owns Royal Dutch Petroleum and a host of smaller exploration and production businesses, said strong trading of liquefied natural gas (LNG) helped offset a sharp drop in production.
The results, which aligned with expectations, were boosted by higher refining margins and realized oil prices and LNG trading and optimization compared with the second quarter. They were offset by lower output in the Integrated Gas division and a loss in the Low Carbon Solutions unit, which manages technologies like carbon capture and storage and hydrogen.
CEO Wael Sawan said the company continued to deliver strong operational and financial performance despite volatile commodity markets. “The company continues to focus on simplifying its portfolio and delivering more value with fewer emissions,” he said in a statement. “These efforts are reflected in the results we have reported today.”
A rise in crude prices helped boost energy profits at Shell and its peers, with the benchmark Brent price up more than 30% since mid-August on fears of an Iran-Israel conflict. However, oil and gas stocks have lost ground recently as investors shifted into other sectors, including consumer goods, due to the global economic slowdown.
In the third quarter, Shell’s Integrated Gas division saw adjusted earnings fall by 9% due to a sharp drop in production, which was affected by maintenance at its Prelude floating LNG facility and sites in Australia, Trinidad and Tobago, and Qatar. Its Upstream unit, which includes its oil and gas exploration activities, saw an 11% jump in adjusted profits, reflecting higher crude prices and a recovery in the North Sea and Nigeria.
The company, which owns the world’s largest LNG fleet, also posted a $3.6 billion profit from its chemicals and products division thanks to higher realized prices. Its Upstream unit posted a gain of 3% in adjusted profits.
Shell announced share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the previous three months, and maintained its dividend unchanged at $0.331 per share. The move underscores the company’s commitment to returning value to shareholders amid volatile markets, analyst Giacomo Romeo at Jefferies said.
The company’s shares rose 0.8 percent in morning trade, extending their rebound from the day’s lows as investors were pleased by the results. The company also tightened the upper range of its 2023 capital spending forecast to $23 billion-$25 billion from a previously announced $23 billion-$26 billion. The move was a slight positive, Redburn analyst Stuart Joyner said. “Results look broadly in line, and the higher buyback and a lower capex range will be taken as a small positive,” he said. The group’s shares rose 0.5% to £19.20 in London.
