Shell reports a $6 billion profit surpass, announces a new share buyback initiative.

• Shell reported adjusted earnings of $6 billion for the July-September period, exceeding analyst expectations of $5.3 billion, according to LSEG's estimates.
• The energy company announced plans to purchase an additional $3.5 billion in shares over the next three months, without altering its dividend payment of 34 cents per share.
• Despite a less favorable macro environment, we have delivered another strong set of results this quarter, as stated by Sinead Gorman, chief financial officer at Shell, in a video presentation.

On Thursday, the British oil giant reported a slight decrease in third-quarter profit compared to the previous year. This was due to a decline in crude oil prices and lower refining margins, which were partially offset by an increase in gas sales.

LSEG's estimates show that the energy company's adjusted earnings for the July-September period were $6 billion, exceeding analyst expectations of $5.3 billion.

In the second and third quarters of 2023, Shell reported adjusted earnings of $6.3 billion and $6.2 billion, respectively.

Shell announced that it plans to purchase an additional $3.5 billion in shares over the next three months, while maintaining its dividend payment at 34 cents per share.

In a video presentation, Sinead Gorman, Shell's chief financial officer, announced that the company has marked its 12th consecutive quarter with at least $3 billion in buybacks.

Despite a less favorable macro environment, we have delivered another strong set of results this quarter, Gorman stated.

She stated that the growth was due to strong operational performance throughout our portfolio, maintaining the momentum we've established in recent quarters.

The net debt decreased by $5.3 billion from the previous year's third quarter to $35.2 billion at the end of the third quarter.

Shares of the London-listed firm rose 1% on Thursday morning.

'A strong position'

Shell reported a 42.3% increase in third-quarter free cash flow, reaching $10.83 billion compared to $7.5 billion in the previous year.

In the third quarter of 2023, cash capital expenditure was $5.65 billion, but in the fourth quarter of the same year, it decreased to $4.95 billion.

According to Maurizio Carulli, an energy analyst at wealth manager Quilter Cheviot, Shell's third-quarter results exceeded expectations in all areas and demonstrate the company's commitment to its strategy of portfolio optimization, cost reduction, and operational enhancement.

Shell is the global leader in liquified natural gas (LNG), a business it developed from scratch since the seventies, with remarkable foresight, according to Carulli. Notably, LNG is the only segment of the oil and gas industry projected to experience significant growth over the next decade.

He stated that the business has positioned itself to withstand fluctuations in commodity prices and capitalize on competitors' difficulties.

This week, BP, a British competitor, experienced its poorest quarterly earnings in nearly four years due to reduced refining profits.

While BP's third-quarter underlying replacement cost profit of $2.3 billion exceeded analyst predictions, it represented a significant decline from the same quarter the previous year.

In the third quarter, global oil demand concerns caused oil prices to plummet by 17%.

Clean energy investments

On Thursday, activist shareholder group Follow This criticized Shell for its third-quarter earnings, pointing out that the company's investments in the renewables and energy solutions division decreased to 8% of its overall capital expenditure, compared to 9% in the second quarter.

In March, Shell weakened its 2030 carbon emissions reduction target, resulting in a decrease in clean energy investments.

Shell announced in an energy transition strategy update that it would reduce its near-term carbon emissions cuts, while still aiming to become a net-zero company by the middle of the century.

Mark van Baal, founder of Follow This, stated that the board of Shell risks the company's future by continuing to invest in fossil fuel expansion.

He stated that the increase in fossil fuel growth hinders the transition to renewables and increases the likelihood of a carbon lock-in, making it more difficult to shift towards clean energy sources annually.

In recent months, the company's renewables and energy solutions businesses experienced significant advancements.

Gorman stated that the Northern Lights joint venture in Norway has completed construction and is now ready to permanently store CO2 to aid European industries in decarbonizing.

She stated that we acquired a combined cycle power plant in Rhode Island, where demand is predicted to rise due to increasing decarbonization efforts related to electrification.

Shell has stated that it aims to decarbonize profitably and has planned to invest between $10 billion to $15 billion in low-carbon energy solutions by 2023 to the end of the next year.