Shell rose 1% on Thursday morning after the oil and gas giant announced a higher dividend and a new share buyback, following a downbeat earnings report for the third quarter. For the three months ending Sept. 30, attributable income was $4.29 billion, significantly lower than last year's $7.04 billion and the Visible Alpha consensus forecast of $5.32 billion.
Meanwhile, revenue declined to $71.09 billion from $76.35 billion, falling short of the $74.06 billion estimate. Shell pointed to lower refining margins, declining oil prices, and rising operating costs as the main reasons for its lackluster performance. It also incurred restructuring expenses and negative accounting adjustments linked to commodity derivatives.
However, the decline was somewhat offset by favorable tax impacts and a rise in integrated gas production, which helped adjusted earnings of $6.03 billion beat the consensus of $5.4 billion. Despite these challenges, the energy group raised its quarterly dividend to $0.344 per share from $0.331 in the prior year.
It also announced a $3.5 billion share buyback in London and the Netherlands to reduce its share capital. The three-month program is set to conclude before Jan. 30, 2025. "The earnings beat was across integrated gas and the upstream, while Shell also cites that oil trading was in line with 2Q (vs guidance at the trading update saying it would be weaker qoq).
Overall, with limited downgrades into the quarter following the trading update, we see this as a strong set of numbers once again," analysts at RBC Capital Markets said. "We continue to see Shell's distribution programme as being more resilient than peers given its fortress balance sheet," the analysts added. Looking ahead, the company expects its cash capital expenditure for full-year 2024 to be below $22 billion.
Meanwhile, integrated gas production is estimated to be in the range of 900,000 barrels of oil equivalent per day to 960,000 boe/d in the fourth quarter..