A Shell logo presented on a sign at a gas station in Nakuru, Kenya.Sopa Images | Lightrocket | Getty ImagesAccording to an LSEG-compiled consensus, analysts had projected Shell’s full-year 2023 net profit to be $27.5 billion. However, Shell exceeded expectations with adjusted earnings of $7.31 billion for the final quarter of 2023. The company attributed the strong performance to robust liquefied natural gas trading and optimization margins, which counteracted weaker oil products trading. It also declared a 4% increase in dividend per share for Q4 and announced a $3.5 billion share repurchase program to be conducted over the next three months, having already completed a previous $3.5 billion buyback announced in November last year. As a result, shares of the London-listed stock rose around 2% during morning trading.
Shell CEO Wael Sawan expressed satisfaction with the progress made by the company, acknowledging that there is still more to accomplish. When asked about the criticism regarding the firm’s insufficient investment in renewable energy, Sawan stated that Shell has three primary areas of focus. He emphasized that they have continued to fortify their balance sheet, reducing it by over a billion dollars in 2023, and distributed 42% of their overall cash flow from operations, amounting to $23 billion, to shareholders. Additionally, he affirmed the company’s commitment to achieving net-zero emissions by 2050 and highlighted the $5.6 billion spent on “low-carbon” projects last year. Sawan emphasized their effort to strike a balance that allows them to maintain energy security while investing in competitive strength for the energy transition. Shell’s net debt amounted to $43.5 billion at the end of the year, compared to $40.5 billion at the end of the third quarter. The company reported impairment charges of $3.9 billion for the final three months of the year.
Commenting on Shell’s results, Jamie Maddock, energy analyst at Quilter Cheviot, remarked that the company “continues to be resilient.” He anticipated that given the heightened geopolitical volatility, especially with ongoing conflicts in the Red Sea and Gaza, oil and gas prices are likely to remain unpredictable in the coming year. Maddock noted that energy giants, such as Shell, have the potential to thrive in such environments, pointing to their performance in 2022. As for other major oil companies, U.S. oil giants Exxon Mobil and Chevron are set to report earnings on Friday, while European peers BP and TotalEnergies are expected to follow suit next week. Oil prices were up on Thursday morning, with the international benchmark Brent crude futures trading at $81.07 per barrel, a 0.6% increase, and U.S. West Texas Intermediate futures trading at $76.35 per barrel, up by 0.7%. Both Brent and WTI contracts experienced a roughly 10% decline in 2023 amid a volatile trading year marked by fluctuating prices due to geopolitical tensions and demand uncertainties.
