Shell first-quarter profit jumps 6% to $10bn on strength in fuel trading business

Company announces share buyback of $4 billion

A view shows a logo of Shell petrol station in South East London, Britain. Reuters

Oil and gas company Shell reported a better-than-expected first-quarter profit on Thursday on strong performance in its fuel trading business, despite lower energy prices.

Shell's quarterly adjusted net profit increased about 6 per cent to $9.65 billion, from $9.13 billion a year earlier. This exceeded the company’s own earnings forecast of $8 billion.

Shell also announced share buyback of $4 billion, the same amount as in the previous quarter.

“Shell delivered strong results and robust operational performance, against a backdrop of ongoing volatility, while continuing to provide vital supplies of secure energy,” Wael Sawan, Shell’s chief executive, said in a statement.

Shell shares were up 1.9 per cent at 12.40pm UAE time following the earnings announcement.

The company's adjusted earnings from its giant integrated gas business rose to $4.92 billion from $4.1 billion a year earlier.

At the same time, profits from the company’s chemicals and refined products unit surged to $1.78 billion from $1.17 billion.

Production volumes of liquefied natural gas were higher than in the fourth quarter as Shell’s Prelude facility in Australia returned to operations after maintenance, the company said.

It reported a record profit of $40 billion in 2022 as it benefited from higher energy prices caused by Russia's invasion of Ukraine last year.

The full-year earnings of $39.87 billion, one of the biggest ever profits reported by a British company, beat the London-listed company's previous record of $28.4 billion set in 2008. Shell made $19.23 billion in 2021.

Brent, the benchmark for two thirds of the world's oil, surged to nearly $140 a barrel following Russia's invasion of Ukraine last year.

The international benchmark has since given up most of its gains and is currently trading at about $73 a barrel amid growing recession concerns.

“Shell … reported another stellar quarter and produced earnings that came comfortably ahead of estimates,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.

“Shareholders would like to see more commitment on the renewable energy side, as this is the time that the company can actually make investments as it not only has bumper profits but also huge tax breaks in terms of its renewable energy investment,” Mr Aslam said.

Last year, the company announced a plan to invest £20 billion ($22.1 billion) to £25 billion over the next 10 years in Britain's energy infrastructure including oil and gas, offshore wind, electric vehicle charging and hydrogen.

On Tuesday, rival BP posted a profit of about $5 billion in the first quarter of this year on stronger oil and gas trading.

The oil and gas company said it made an underlying profit of $4.96 billion (£4 billion) in the first three months of 2023.

That was up from the $4.8 billion it made in the fourth quarter of last year but down from the $6.25 billion it made in the same period last year.