British oil giant Shell reported stronger-than-expected first-quarter profit, attributed to higher refining margins and robust oil trading. The company announced adjusted earnings of $7.7 billion for the first three months of the year, exceeding analyst expectations of $6.5 billion. Shell’s CEO described the results as another quarter of strong operational and financial performance. The company also announced a $3.5 billion share buyback program, which it aims to complete over the next three months, while maintaining its dividend. Despite the positive results, shares of the London-listed stock dipped 0.6% following the announcement. However, investment managers like Stuart Lamont remain bullish on Shell, noting the increase in earnings, cost reduction, and debt reduction.
Shell’s chemicals and products division, including refining margins and oil trading, saw a sharp increase in first-quarter adjusted earnings to $2.8 billion. The company reported first-quarter net debt of $40.5 billion, down from $43.5 billion at the end of 2023. However, the first-quarter profit was down roughly 20% compared to the same period a year earlier, reflecting a trend seen across the energy industry. Other major oil companies, including U.S.-based Exxon Mobil and Chevron, as well as France’s TotalEnergies and Norway’s Equinor, reported steep year-on-year falls in first-quarter profits. This decline in profit is attributed to tumbling gas prices, with spot gas prices in Europe falling more than 45% over the past year.
Despite the recent challenges faced by the energy industry, Shell’s first-quarter results demonstrate resilience and strong financial performance. The company has managed to increase earnings, reduce costs, and lower its debt, showcasing its operational efficiency. Investors were seeking reassurance on volumes and capital discipline, both of which were delivered in Shell’s first-quarter update. The addition of an extension to the share buyback program further strengthened investor confidence in the company’s financial health and long-term prospects.
Looking ahead, Shell’s British rival BP is set to report its first-quarter earnings on May 7, providing further insight into the current state of the energy industry. The trend of falling profits among major oil and gas companies indicates the broader challenges faced by the sector, especially in the wake of fluctuating gas prices and geopolitical tensions. Despite these challenges, Shell’s strong first-quarter performance and strategic initiatives like the share buyback program reflect a commitment to financial stability and value creation for shareholders. The company’s ability to navigate the current market conditions and deliver solid results underscores its position as a leading player in the global energy landscape.
