Shell, whose logo is seen above a gas station in London, has bought back about US$60-billion of its stock in the last four years.HENRY NICHOLLS/AFP/Getty Images
Shell SHEL-N missed fourth-quarter profit expectations on Thursday with an 11-per-cent drop to the lowest level since early 2021 amid weaker oil prices, but kept its bumper share buyback program.
Shareholders of oil majors have become used to huge buybacks, but lower oil and gas prices ahead of an expected crude and liquefied natural gas glut have prompted speculation they might be reduced, especially at European firms.
Shell has bought back about a quarter of its stock in the last four years, or about US$60-billion – including US$14-billion in 2025, according to LSEG data. At a continued pace of US$3.5-billion per quarter, plus dividends, it is currently above its target payout range.
U.S. rival Exxon XOM-N paid US$17.2-billion in dividends and repurchased US$20-billion worth of shares last year, planning to keep its buybacks at that level this year. Norway’s Equinor, meanwhile, slashed its buyback program by 70 per cent on Wednesday.
Profits at Shell’s integrated gas and marketing divisions missed expectations, while a loss in its chemicals and products unit – hit by weak oil trading and a broad chemicals market rout that Shell had flagged – was deeper than analysts expected.
The stock was down 1.9 per cent in early trading, underperforming a 1.6-per-cent drop in the European energy index.
Fourth-quarter net profit came in at US$3.3-billion, below analysts’ average estimate of US$3.5-billion in a company-provided poll for adjusted earnings, Shell’s definition of net profit.
The share buyback, together with US$2.1-billion in dividends, lifted shareholder payouts over the last four quarters to 52per cent of operating cash flow, above Shell’s 40-per-cent to 50-per-cent target range.
Asked about this, chief financial officer Sinead Gorman told reporters that the rolling 12-month range was “sacrosanct.”
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Shell increased its quarterly dividend by 4 per cent to US$0.372 per share, as planned, and has achieved US$5.1-billion in cost cuts out of a target of US$5-billion to US$7-billion by 2028 compared with 2022.
The world’s largest liquefied natural gas trader reported fourth-quarter cash flow from operations of US$9.44-billion, ahead of expectations for US$7.87-billion but down from US$13.16-billion a year earlier.
RBC analysts noted that Shell’s reserve life had fallen to 7.8 years, from 8.9 years in 2024. “Given this is weaker than some peers, we anticipate this could fuel more questions around Shell’s M&A reserve replacement strategy,” they said.
Brent futures averaged around US$63 per barrel in the quarter, down from about US$74 a year earlier, according to LSEG data and Reuters calculations.
The benchmark Dutch front-month gas contract at the TTF hub averaged about €30 per megawatt-hour in the quarter, down from around €43.3 a year earlier.