Shell shares rose on Thursday morning as the oil and gas giant’s earnings for the Q3 came in almost bang in line with estimates.
Shares in the group were 2% higher at the time of writing – a sharp contrast to BP’s performance after they released earnings this week.
After peers BP, Chevron, and Exxon missed analyst estimates, Shell shareholders will be delighted to learn higher oil prices are feeding through into Shell’s profitability and LNG maintenance didn’t impact earnings too heavily.
Investors will also welcome increased share buybacks as the group returns some of its $7.5bn free cash flow to shareholders.
“Shell has not bucked expectations, unpacking underlying earnings of $6.2 billion for the third quarter. This position of strength has prompted it to announce share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the previous three months,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Revenues have been boosted, not just from the creep higher in oil prices, but also by higher margins in its refining business. Shell is also a leading supplier of Liquified Natural Gas and, although scheduled maintenance kept the taps tighter, with production across the integrated gas division down 9%, earnings from its gas trading business ticked up. Tighter supply has enabled the company to make higher margins diverting gas away from other regions to Europe where it’s still in high demand.”
The new Shell CEO’s strategy to refocus on hydrocarbons and take a more tentative approach to investing in clean energy has supported shares this year, with Shell gaining 14% since the beginning of the year.
Like all major fossil fuel companies, Shell must contend with volatility in underlying energy markets as traders weigh geopolitical threats with global demand.
