Shell Reports $5.58B Q1 Profit, Boosts Buybacks

Q1 Financial Highlights

Shell reported adjusted earnings of $5.58 billion for Q1, exceeding analyst expectations of $4.96 billion. Despite this, profits declined by 28% year-over-year from $7.73 billion in Q1 2024. The drop is attributed to lower oil prices, which averaged $75 per barrel compared to $87 in the same period last year, and weakened refining margins, which fell from $12 per barrel a year ago to $6.2 per barrel this quarter. These factors highlight the challenging macroeconomic environment and its impact on energy sector profitability.

Share Buybacks and Cash Flow

Shell announced a $3.5 billion share buyback program for the next quarter, marking the 14th consecutive quarter of such initiatives. This aligns with the company’s commitment to return 40%-50% of operational cash flow to shareholders. Over the past year, total shareholder distributions amounted to 45% of operational cash flow. Cash flow from operating activities totaled $9.3 billion for the quarter, slightly below the consensus estimate of $9.6 billion. Shell’s strong balance sheet and disciplined capital allocation continue to support its shareholder-focused strategies.

Operational Performance and Strategy

The LNG and upstream divisions emerged as key contributors to Shell’s Q1 performance. The Integrated Gas division posted $2.87 billion in adjusted earnings, reflecting robust LNG trading results, while upstream operations generated $2.3 billion, supported by lower depreciation and fewer exploration write-offs. Shell also completed the acquisition of Pavilion Energy, strengthening its LNG portfolio. On the strategic front, the company continues to optimize its portfolio through divestments, including onshore assets in Nigeria and the Singapore Energy and Chemicals Park. These moves align with Shell’s long-term goal of balancing traditional energy operations with growth in low-carbon solutions.