People pump gas into their vehicles at a Shell gas station in Alhambra, California, on October 2, 2023.
Frederic J. Brown | Afp | Getty Images
British oil giant Shell reported third-quarter profit of $6.2 billion on Thursday, roughly in line with estimates, as the company benefited from higher oil prices and refining margins.
Analysts expected adjusted profit of $6.48 billion, according to a consensus compiled by LSEG.
The profit was above the second quarter’s $5.1 billion but marked a sharp decline from $9.45 billion a year ago, when the Russia-Ukraine conflict drove up oil and gas prices .
The company also announced a $3.5 billion share buyback to be completed over the next three months. Shell CEO Wael Sawan said the $6.5 billion forecast for the second half of the year was now “well above” the $5 billion announced in June.
“Shell delivered another quarter of strong operational and financial performance, capitalizing on opportunities in volatile commodity markets,” Sawan said in a statement.
Free cash flow fell to $7.5 billion from $12.1 billion in the second quarter. Cash investments increased from $5.1 billion to $5.6 billion.
The major energy companies have had a record year of profits, fueled by soaring fossil fuel prices.
Oil prices rose sharply again in the third quarter of 2023 on factors including supply cuts in Saudi Arabia and Russia, while the International Energy Agency said oil markets will remain tight amid escalating conflict in the Middle East.
BP on Tuesday reported a year-on-year decline in third-quarter profit of $8.15 billion to $3.293 billion, below analysts’ estimates, although the French group slightly beat TotalEnergies last week.
While BP said subdued quarterly performance was partly due to weakness in gas marketing and trading, Shell said performance in its integrated gas division was stable, citing favorable trading.
Shell’s renewable energy and energy solutions division, meanwhile, reported a loss of $67 million, which it attributed to weaker margins due to seasonal effects and lower trade flows. Capital expenditures were $659 million.
The findings come amid criticism of the pace of the company’s decarbonization program, including from its own shareholders.
Shell confirmed last week that it will cut 200 jobs in its low-carbon solutions division in 2024.
Shell’s London-listed shares opened around 1% higher on Thursday.