Published 2nd Nov 2023, 08:53 GMT

The London-listed oil and gas producer said its adjusted earnings fell 34 per cent in the three months compared with a year earlier, landing at a little over 6.2 billion dollars (£5.1bn).

The result was only 24 million dollars (£19.7m) behind expectations, unlike BP which missed its forecast underlying replacement cost profit by around 700 million dollars (£575m), causing shares to plummet on Tuesday.

Shell’s earnings rose compared with the second quarter of this year thanks to higher oil prices, higher margins at its refining plants, and more production at its upstream unit.

Oil giant Shell managed to avoid the fate that befell rival BP earlier in the week as its earnings for the third quarter stayed largely in line with expectations. (Photo by Yui Mok/PAWire)

It gave chief executive Wael Sawan the headroom he needed to announce a plan to return 3.5 billion dollars (£2.9bn) to Shell’s investors by buying back their shares before the fourth-quarter results.

“Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets,” he said.

“Shell is commencing a 3.5-billion-dollar buyback programme for the next three months, bringing the buybacks for the second half of 2023 to 6.5 billion dollars, well in excess of the 5 billion dollars announced at capital markets day in June.”

Shell has said it will return to shareholders 23 billion dollars (£18.9bn), Mr Sawan said.

The size of the payouts was criticised by Jonathan Noronha-Gant a campaigner at Global Witness.

“Shell’s shareholders remain some of the biggest winners of Russia’s brutal war in Ukraine and ongoing global instability.

“The turmoil in fossil fuel markets allows Shell to rake in enormous profits – but instead of investing in clean energy, the company has doubled down on oil, gas, and shareholder pay-outs.”

This summer Shell abandoned its target to reduce oil production by 1-2 per cent every year until 2030, saying it had met the target early by selling off some of its assets meaning another company is responsible for the oil fields.

Shell said that production at its integrated gas division suffered during the quarter. The amount of natural gas produced fell by 8 per cent compared to the previous three months.

Total production of oil and gas from the unit fell by 9 per cent largely due to maintenance at a site in Trinidad and Tobago.

Production of oil and gas at the business’s upstream unit rose by 3 per cent, Shell said, helping to bump up earnings by 392 million dollars (£322m).

The rise in oil prices also boosted the upstream unit’s earnings by 525 million (£432m), Shell said.

Oil giant Shell meets expectations as profit slumps by a third