Shell ramps up acquisitions as gas trading boosts third-quarter profit to $6.2 billion

LNG 2023 energy fair in Vancouver

The logo of British multinational oil and gas company Shell is displayed during the LNG 2023 energy expo in Vancouver, British Columbia, Canada, July 12, 2023. REUTERS/Chris Helgren/File Photo Acquire Licensing Rights

  • Shell increases buybacks to $3.5 billion
  • LNG volume fell by 4% on the Prelude share price

LONDON, Nov 2 (Reuters) – Shell ( SHEL.L ) reported a 34% annual drop in third-quarter profit to $6.2 billion on Thursday as energy prices cooled, with strong liquefied natural gas (LNG) trading helping to compensate for a sharp drop in its production.

The company also announced share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the previous three months, and kept its dividend unchanged at $0.331 per share.

Shell’s results wrap up third-quarter earnings for the West’s leading energy companies, which, despite seeing sharp drops in profits from last year as oil and gas prices fell, still allowed boards to return billions to investors, while Exxon ( XOM.N ) and Chevron ( CVX.N ) announced deals to acquire smaller oil and gas companies for a combined $113 billion.

Shell CEO Wael Sawan told analysts on a call that Shell prefers to buy back shares rather than “go for big acquisitions.”

The British company has returned about $23 billion to shareholders in buybacks and dividends so far this year.

Shell shares were up more than 4% by 1615 GMT.

Unlike rival BP ( BP.L ), whose gas trading results weighed on quarterly profits, Shell said its earnings were supported by “favorable” LNG trading results, which were higher than in the second quarter.

However, its earnings were again hit by lower production at its flagship LNG division, which has been plagued by operational problems in recent years, particularly at its 3.6 million tonnes per annum capacity. year Prelude floating LNG production facility off the coast of Australia.

Production in the Integrated Gas division fell 9% from the previous quarter due to maintenance at Prelude – which was also cited as behind a 4% drop in liquids volumes – as well as sites in Trinidad and Tobago and in Qatar, it said .

Shell expects the Prelude to ramp up again in December after starting maintenance work in August, a company spokesman said Thursday.

“We continue to simplify our portfolio while delivering more value with less emissions,” Sawan said in a statement.

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Shell reported adjusted earnings of $6.22 billion, broadly in line with analysts’ company forecast of $6.25 billion.

That compared with quarterly earnings of $9.45 billion a year earlier and $5 billion in the second quarter of 2023.

The group tightened the upper end of its 2023 investment target to $23 billion to $25 billion from $23 billion to $26 billion previously.

“Results look broadly in line, but the higher buyback and lower investment range is likely to be taken as a small positive,” Redburn analyst Stuart Joyner said.

Sawan, who took the helm in January, promised to revamp Shell’s strategy to focus on higher-margin projects, stable oil production and increase natural gas output.

As part of the strategy, Shell announced plans to cut at least 15% of the workforce in the company’s low-carbon solutions division and scale back its hydrogen business.

Shell said most of its renewable energy and energy solutions businesses were loss-making in the third quarter.

Reporting by Ron Bousso and Shadia Nasralla; Editing by Jason Neely and Jan Harvey

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Ron has covered the world’s leading oil and gas companies since 2014, focusing on their efforts to transition to renewable and low-carbon energy and the sector’s turmoil during the COVID-19 pandemic and following Russia’s invasion of Ukraine. He has been named reporter of the year in 2014 and 2021 by Reuters. Before Reuters, Ron reported on the New York stock markets in the wake of the 2008 financial crisis after covering conflict and diplomacy in the Middle East for AFP out of Israel.

Writes about the intersection between companies’ oil and climate policy. Has reported on politics, economics, migration, nuclear diplomacy and business from Cairo, Vienna and elsewhere.

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