Shell announces $3.5 billion share buyback

Shell reported a drop in fourth-quarter profit on Thursday, missing estimates due to lower refining margins and LNG trading, while announcing a $3.5 billion share buyback and a 4% dividend increase.

The oil and gas major reported adjusted earnings, its definition of net profit, of $3.66 billion for the quarter ended Dec. 31, down from $7.31 billion a year earlier.

That was short of the $4.09 billion expected by analysts polled by Vara Research.

The weaker-than-expected results add pressure on CEO Wael Sawan, who has been focused on cutting costs and pivoting the company back to its most profitable sectors — oil, gas, and biofuels — while shifting away from renewable power.

Shares of the company were up 0.25% in morning trading, broadly in line with the blue-chip FTSE 100 index.

Shell also expects 2025 capital expenditure to fall below last year’s $21 billion, with more details to be shared at its capital markets day in March.

For the full 2024, Shell’s profit fell 16% to $23.72 billion.

The world’s leading oil and gas companies experienced a decline in profits through 2024, following record earnings in the previous two years, as energy prices stabilised and oil demand weakened.

Shell’s refining operations reported an adjusted loss of $229 million in the chemicals and products unit, compared to a $29 million profit last year.
Refining margins weakened globally due to reduced economic activity and new refineries opening in Asia and Africa.

In the fourth quarter, Shell ran its refineries at 76% capacity, and said it expected to increase that to 80-88% in the first quarter.

Shell also said that it did not have a timeline for the arbitration proceedings regarding LNG supply from Venture Global’s Calcasieu Pass facility.

Venture Global, whose $58 billion market debut fell short of high expectations last week, began generating proceeds in 2022 when its first facility, Calcasieu Pass, started producing the superchilled gas.

However, the facility is still being commissioned. The lengthy testing and optimising process before commercial operation has led to contract disputes with customers, including BP, Shell and Italy’s Edison, over non-receipt of contracted cargoes.

“Delaying those cargoes simply means that we have to go out and buy higher priced spot cargoes to meet demand and ultimately, it impacts end consumers,” Shell Chief Financial Officer Sinead Gorman told reporters on Thursday.