Shell Earnings Beat Forecasts on Strong Gas Trading; Launches $3.5 Bln Buyback


Shell's annual profits declined last year, though not as much as the market anticipated, amid challenges in the European energy sector stemming from lower oil and gas prices and diminished refining margins. Despite this, the London-based energy giant announced plans on Thursday to repurchase $3.5 billion in shares in the current quarter and increased its fourth-quarter dividend by 20% to 34.40 cents per share. This move aligns with Shell's commitment to robust shareholder returns despite the downward pressure on commodity prices.

On a net current-cost-of-supplies basis, a metric similar to the net income reported by U.S. oil companies, Shell recorded $20.28 billion in full-year profit. This compares to the remarkable $41.56 billion in 2022 when oil and gas prices experienced a surge following Russia's invasion of Ukraine. In the fourth quarter, Shell's profit on the same basis dropped to $1.38 billion, reflecting lower refining margins, trading margins for crude and oil products, and higher operating expenses.

However, adjusted fourth-quarter earnings, which exclude certain commodity-price adjustments and one-time charges, rose to $7.31 billion from $6.22 billion in the third quarter. This exceeded the consensus forecast of $6.04 billion based on a poll of 24 analysts. The increase was attributed to higher trading gains from liquefied natural gas, favorable tax movements, and increased production.

Despite the challenging market environment, Shell's integrated-gas unit, including its prominent LNG business, posted adjusted fourth-quarter earnings of $3.96 billion, up from $2.53 billion in the preceding quarter. Shell's CEO, Wael Sawan, emphasized the company's focus on simplifying its organization and delivering more value with fewer emissions as it enters 2024.

While quarterly net profits fell to $474 million from $7.04 billion, reflecting a $3.9 billion impairment charge, Shell reported positive cash flow from operations, reaching $12.575 billion in the quarter, surpassing consensus forecasts. Looking ahead, Shell expects specific production figures for the current quarter, maintaining its commitment to streamlined operations and sustainable value creation.

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