Shell, Europe’s largest oil and gas producer, exceeded market expectations with its second-quarter earnings and announced a new share buyback plan. The company revealed it will repurchase $3.5 billion (€3.2 billion) in shares over the next three months.
In the second quarter, Shell reported a net profit of $6.3 billion (€5.8 billion), beating analysts’ forecasts of $5.9 billion (€5.5 billion). This result was driven by high oil and gas prices, although lower refinery margins partially offset gains. The profit marked a 25% increase from the same quarter last year but was down 19% from the previous quarter. Despite these strong results, Shell’s shares fell 0.5% on Thursday.
The company’s CEO, Wael Sawan, highlighted the strong performance, stating, “Shell delivered another strong quarter of operational and financial results.” Alongside the earnings announcement, Shell revealed a $3.5 billion (€3.2 billion) share buyback program for the coming quarter.
Shell’s performance follows a similar trend to BP, which also increased its dividend and announced a $3.5 billion share repurchase plan earlier this week after exceeding quarterly earnings expectations.
Shell has recently revised its carbon emission reduction target. In March, the company announced it would lower its goal to reduce emissions by 15% to 20% by 2030, down from the previous 20% target. It also removed a further reduction goal for 2035. Despite this adjustment, Shell remains committed to achieving carbon neutrality by 2050.
The company has focused on investments in liquefied natural gas (LNG), noting recent agreements including the acquisition of Pavilion Energy in Singapore, a partnership in the ADNOC Ruwais LNG project in Abu Dhabi, and a final investment decision on the Manatee backfill project in Trinidad and Tobago.
Under CEO Wael Sawan, who began his role in January 2023, Shell has shifted its focus towards more profitable fossil fuel ventures, moving away from renewable and hydrogen sectors. In response to shareholder pressures and reduced profitability, Shell announced plans last year to cut 15% of jobs in its low-carbon solutions division. Additionally, in May, the company revealed it would reduce its workforce in its deals team by at least 20%, aiming to enhance value through performance and efficiency.
Shell also indicated it might face an impairment charge of up to $2 billion (€1.85 billion) due to the sale of its Singapore refinery and the suspension of a major biofuel plant in Rotterdam. Production of fossil fuels, including oil, gas, and LNG, is expected to decrease in the third quarter due to scheduled maintenance.
Looking ahead, US oil giants Exxon Mobil and Chevron will report their second-quarter results later this week. Compared to Shell and BP, these American companies have faced fewer regulatory obstacles and enjoy higher price-to-cash ratios. Shell has even considered relocating its listing to New York, as mentioned in May, due to perceived undervaluation in European markets.
Additionally, a potential win for Donald Trump in the upcoming US election could lead to lower corporate tax rates and benefit fossil fuel companies, which might influence European markets as well.