Market Commentary

Shell Reports Q3 Financial Results and Adjusts 2023 Plans

Jahanzeb Salam
6 Feb 2024 · 2 minutes read

Multinational oil and gas company Shell PLC (SHEL:US) recently announced a 34% year-on-year decline in its third-quarter profit, amounting to $6.2 billion, closely aligning with the company's provided analysts' forecast of $6.25 billion. This decline can be attributed to the cooling of energy prices, which was partially offset by robust trading of liquefied natural gas (LNG), mitigating the impact of reduced production.

Furthermore, the company adjusted its 2023 capital spending target, narrowing the range from $23 billion-$26 billion to $23 billion-$25 billion. In addition, Shell disclosed a share buyback program of $3.5 billion over the next three months, up from the previous three-month buyback of $2.7 billion. The dividend remains unchanged at $0.331 per share.

Stuart Joyner, an analyst at Redburn, commented "Results look broadly in line, but the higher buyback and a lower capex range (is) likely to be taken as a small positive," 

These results mark the conclusion of third-quarter earnings for major Western energy companies, all of which have experienced a significant decline in profits compared to the previous year. This decline is primarily due to the easing of oil and gas prices following the initial surge after Russia's invasion of Ukraine.

In contrast to BP PLC (BP:US), whose quarterly profits were negatively impacted by gas trading results, Shell reported that its earnings were supported by "favorable" LNG trading results, which exceeded the second-quarter performance. 

Production in the Integrated Gas division saw a 9% decrease from the previous quarter, primarily due to maintenance at the Prelude facility, which also contributed to a 4% reduction in liquefaction volumes. Maintenance activities in Trinidad and Tobago and Qatar were also factors in the production decline.

Shell's CEO, Wael Sawan, expressed satisfaction with the company's performance in a statement, emphasizing their commitment to streamlining their portfolio while delivering more value with fewer emissions.

Shell's CEO, Wael Sawan, expressed satisfaction with the company's performance in a statement, "Shell delivered another quarter of strong operational and financial performance." 

He also added. "We continue to simplify our portfolio while delivering more value with less emissions."

Most recently, Congressman Michael McCaul was seen on an investing spree in the oil giant when the stock was trading at around $60 apiece.