British oil giant, Shell, reaps a staggering $6.2 billion in profits for the third quarter of 2023, riding high on the wave of soaring oil prices and robust refining gains. What’s more, the company has set its sights on a $3.5 billion buyback extravaganza, marking its most substantial buyback initiative since 2007.
While the Q3 profit surged from the previous quarter’s $5.1 billion, it did dip when compared to the $9.45 billion reported in the same period the previous year, during the peak of the Russia-Ukraine conflict, which propelled oil and gas prices to unprecedented heights.
This monumental buyback program will be spread over the next three months, a move that Shell CEO, Wael Sawan, described as surpassing expectations. Sawan stated, “Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets.”
However, despite this commendable performance, free cash flow saw a decline from $12.1 billion in Q2 to $7.5 billion in the third quarter. The cash capital expenditure also inched up from $5.1 billion to $5.6 billion.
Energy companies are basking in the glow of a record-breaking earnings year, fueled by surging fossil fuel prices.
The resurgence of oil prices in the third quarter of 2023 can be attributed to various factors, including production cuts by Saudi Arabia and Russia, while the International Energy Agency predicts ongoing volatility in oil markets due to escalating unrest in the Middle East.
In comparison, BP reported a year-on-year drop in third-quarter profit, plummeting from $8.15 billion to $3.293 billion, missing analyst projections. On the other hand, France’s TotalEnergies managed to exceed expectations last week.
Shell showcased consistent performance in its integrated gas segment and lucrative trading. In contrast, BP attributed its lackluster quarterly performance in part to weaknesses in gas marketing and trading.
Furthermore, Shell’s energy solutions and renewables division recorded a $67 million loss, attributing it to decreased trade and weaker margins influenced by seasonal impacts. Capital spending in this division amounted to $659 million.
Notably, Shell’s rapid decarbonization efforts have faced criticism, even from some of its own shareholders. In a recent development, Shell announced its intention to cut 200 jobs from its low-carbon solutions division by 2024.
