Shell reported first-quarter adjusted earnings that surpassed market expectations, reaching $7.73 billion, although down from $9.65 billion in the same period last year. The company attributed this performance to robust margins from crude and oil trading, alongside lower operating expenses. Despite lower liquefied natural gas (LNG) trading, trading gains were driven by increased margins from crude and oil products, as well as refining.
Total oil and gas production saw a notable 10% increase from the fourth quarter, primarily due to reduced maintenance at key facilities like the Prelude platform offshore Australia and the Pearl gas-to-liquids plant in Qatar. The integrated natural-gas segment contributed $3.68 billion in adjusted earnings, while the upstream business accounted for $2.27 billion, both exceeding market forecasts.
Continuing its trend of rewarding shareholders, Shell initiated a $3.5 billion share buyback program, set to conclude by the release of its second-quarter results. Additionally, the company raised its dividend payout to 34.40 cents per share, up from 28.75 cents in the previous year’s first quarter, resulting in total shareholder returns of $5.0 billion.
Shell’s CEO, Wael Sawan, has been prioritizing execution and maximizing asset value to generate profits aimed at funding shareholder returns, aiming to bridge the valuation gap with U.S. rivals like Chevron and Exxon. One strategy to address this gap could involve relocating the primary listing to New York, potentially attracting more investors from the region.
While Chevron and Exxon reported declining first-quarter profits due to reduced oil-refining margins and natural-gas prices, Shell’s first-quarter profit on a current cost of supplies basis was $7.16 billion, down from $9.26 billion in the previous quarter. Despite this, cash flow from operations exceeded market expectations at $13.33 billion.
Looking ahead to the second quarter, Shell aims for integrated-gas production between 920,000 to 980,000 oil-equivalent barrels a day, LNG volumes of 6.8 million to 7.4 million tons, and upstream output ranging from 1.63 million to 1.83 million barrels of oil equivalent a day.
Overall, Shell’s robust performance in the first quarter, combined with its strategic initiatives to enhance shareholder value, positions the company well for continued growth and profitability in the evolving energy landscape.