Shell has announced a hefty new share buyback programme and raised its quarterly dividends, despite a downturn in profits.
The London-listed energy giant has posted adjusted earnings for its second quarter of $5.1bn, with trading between April and June less lucrative for the fossil fuel major than previous windows.
This steep quarter-by-quarter drop on the $9.6bn profits it reported in the first three months of trading this year, and less than half of the $11.5bn it made in 2022’s second quarter when the company went on to achieve record results.
Earnings have been weighed down by falling oil and gas prices and tightening refining margins, alongside lower demand for liquefied natural gas in the summer months across Europe.
This was forecast by Shell in its trading update earlier this month.
To appease investors, Shell has unveiled a fresh share buyback programme of $3bn, expected to be completed in time for its third quarter results announcement.
This in line top of commitments made on its ‘capital markets day’ last month, with Shell hiking its quarterly dividend 15 per cent to $0.331 per share in line with earlier pledges.
Overall total shareholder distributions in the second quarter amounted to $5.6 billion, of which $2 billion was dividend payments and $3.6 billion was share buybacks.
It expects to hand out a further $2.5bn at its third quarter results.
Meanwhile, cash flow from operations has been measured $15.1 billion for the three months, while debt levels have been eased, with net debt decreasing by $3.9bn (8.8 per cent) from $44.2 billion in March to $40.3 billion at the end of June.
The company has also lowered its expectations for capital expenditure to $23-26bn for the full year.
Chief executive Wael Sawan said: “Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment. As we deliver more value with less emissions, we will continue to prioritise share buybacks, given the value that our shares represent.”
Shell is the latest energy firm to report a downturn in profits, with Equinor recording a decline in earnings yesterday.
Centrica, Chevron and Exxon will also posted their earnings this week.