Shell Reports Best Quarterly Earnings in Two Years but Shares Drop
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy SHEL?
Source: seekingalpha
- Quarterly Earnings Surge: Shell (SHEL) reported its best quarterly earnings in two years, yet its shares fell by 2.9%, indicating market concerns about future uncertainties despite strong performance.
- Dividend Increase and Buyback Cut: The company raised its dividend by 5% while reducing its quarterly buyback program from $3.5 billion to $3 billion to manage short-term liquidity pressures stemming from the Middle East conflict.
- Gas Production Warning: Shell anticipates a drop in natural gas production from 909K boe/day in Q1 to a forecast of 580K-640K boe/day in Q2 due to asset damage in Qatar, highlighting the direct impact of the war on operations.
- Rising Debt and Tax Pressure: With net debt increasing by 27% year-over-year, analysts suggest that despite strong earnings, sustained high oil prices may lead to calls for additional taxes on oil profits, adding to future uncertainties.
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Analyst Views on SHEL
Wall Street analysts forecast SHEL stock price to fall
10 Analyst Rating
5 Buy
5 Hold
0 Sell
Moderate Buy
Current: 85.360
Low
41.75
Averages
74.27
High
91.00
Current: 85.360
Low
41.75
Averages
74.27
High
91.00
About SHEL
Shell plc is an international energy company engaged in the principal aspects of the energy and petrochemical industries. The Company's segments include Integrated Gas, Upstream, Marketing, Chemicals and Products, Renewables and Energy Solutions, and Corporate. The Integrated Gas segment includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products. It includes natural gas and liquids exploration and extraction, and the operation of the upstream and midstream infrastructure. The Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas and operates the infrastructure necessary to deliver them to the market. The Marketing segment comprises the Mobility, Lubricants, and Sectors & Decarbonization businesses. The Chemicals and Products segment includes chemicals manufacturing plants with their own marketing network, and refineries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Industry Response: CEOs of Chevron and ExxonMobil concur that it will take months to rectify the supply/demand imbalance once the conflict ends, indicating that the oil supply shortfall will worsen in the interim, potentially leading to increased volatility in oil prices.
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- Ongoing Conflict Impact: CEOs from Chevron and ExxonMobil agree that it will take months to rectify the supply/demand imbalance, suggesting that until the Middle East conflict is resolved, oil supply shortages will persist, potentially leading to increased price volatility.
- Dividend Performance Comparison: While Shell offers a 3.4% dividend yield, Chevron and Exxon have a stronger track record of dividend growth, with Chevron at 3.9% and Exxon at 2.8%, making them more attractive to investors, especially during periods of low oil prices.
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See More
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- Significant Trading Performance: In Q1 2026, TotalEnergies, Shell, and BP's trading units are estimated to have earned between $3.3 billion and $4.75 billion extra, showcasing strong performance during market volatility and reinforcing their competitive edge in the global energy market.
- Notable Profit Growth: TotalEnergies reported a quarterly net income of $5.4 billion, a 29% year-over-year increase; Shell's adjusted earnings reached $6.92 billion, up 23% from last year; BP's net profit hit $3.2 billion, more than doubling from the same period in 2025, reflecting the success of trading activities.
- Market Competitive Advantage: The top three European oil majors excel in establishing large trading units, particularly in high-volatility markets, allowing them to capitalize on trading opportunities and gain a competitive advantage over U.S. peers amid valuation gaps.
- Risks and Rewards: While trading desks have generated substantial short-term profits, analysts caution that over-reliance on trading could lead to cash management challenges, and in calmer markets, trading profits may take a backseat to core business revenues.
See More
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- Global Oil Shortage: Shell CEO Wael Sawan reports a global oil shortage of 1 billion barrels due to geopolitical conflicts in the Middle East, with recovery expected to take months, leading to sustained high energy prices that will impact the global market.
- Rising Energy Prices: Elevated oil prices will benefit integrated energy giants like Shell, ExxonMobil, and Chevron, with Chevron's 3.9% dividend yield surpassing both Shell and Exxon, demonstrating its stability throughout the energy cycle.
- Opportunities in U.S. Upstream Companies: Companies like Diamondback Energy and Devon Energy, focused solely on oil and gas production, estimate free cash flow yields of 15% at $90 per barrel oil, with Devon projecting a yield of 21% at $110 per barrel, highlighting their potential profitability.
- Market Volatility: While the Middle East conflict raises concerns, the inherent volatility of energy markets remains unchanged, prompting investors to choose strategies based on risk tolerance, with long-term investors favoring Chevron and short-term traders considering Diamondback and Devon Energy.
See More
Shell Executive Cederic Cremers Sells Shares
- Executive Transaction Disclosure: Shell's President Cederic Cremers sold 9,000 ordinary shares on May 8, 2026, totaling €322,425, indicating a potential decline in executive confidence in the company's stock.
- Transaction Details: The shares were sold at a price of €35.825 each in a non-trading venue, reflecting the executive's risk management strategy amid market volatility.
- Market Reaction: Although the sale may raise concerns about Shell's future performance, the transaction did not significantly impact the stock price in the short term, indicating ongoing market confidence in Shell's fundamentals.
- Compliance Requirements: This transaction complies with EU and UK market abuse regulations, ensuring transparency and compliance, which further enhances investor trust in Shell's governance structure.
See More
Shell CEO Warns of Oil Supply/Demand Imbalance
- Global Oil Shortage: Shell CEO Wael Sawan warns of a current shortfall of 1 billion barrels of oil, a sentiment echoed by Halliburton CEO Jeffrey Miller, indicating that this shortage will exacerbate rising oil prices and impact global economic stability.
- Consensus Among Executives: CEOs from Chevron and ExxonMobil agree that it will take months to rectify the growing supply-demand imbalance, highlighting the profound effects of current geopolitical conflicts on the oil market, which necessitates cautious investor strategies.
- Dividend Performance Discrepancy: While Shell offers a dividend yield of 3.4%, Chevron and Exxon have a stronger track record of dividend growth at 3.9% and 2.8% respectively, making them more attractive for long-term investors seeking stability.
- Investment Strategy Recommendation: For long-term investors, Chevron is viewed as the most appealing option among integrated energy giants, particularly as oil prices are expected to decline, providing reliable dividend income and mitigating investment risks.
See More
Middle East Conflict Causes Global Oil Shortage
- Global Oil Shortage: The closure of the Strait of Hormuz due to the Middle East conflict has resulted in a shortage of 1 billion barrels of oil, with Shell CEO Wael Sawan and Halliburton CEO Jeffrey Miller sounding alarms about the ongoing supply/demand imbalance that is expected to last for months, impacting global energy market stability.
- Industry Response: CEOs of Chevron and ExxonMobil concur that it will take months to rectify the supply/demand imbalance once the conflict ends, indicating that the oil supply shortfall will worsen in the interim, potentially leading to increased volatility in oil prices.
- Investment Strategy: In the current high oil price environment, investors are advised to focus on integrated energy giants like Shell, Chevron, and Exxon, noting that while Shell cut its dividend in 2020, Chevron and Exxon have consistently increased theirs, demonstrating stronger financial stability.
- Dividend Yield Comparison: Currently, Chevron offers a dividend yield of 3.9%, Exxon at 2.8%, and Shell at 3.4%, making Chevron the most attractive option among integrated majors for long-term investors, especially as oil prices are expected to decline, providing reliable dividend income.
See More
Shell CEO Warns of Oil Supply/Demand Imbalance
- Global Oil Shortage: Shell CEO Wael Sawan warns that the world is currently short 1 billion barrels of oil, a sentiment echoed by Halliburton CEO Jeffrey Miller, indicating a growing supply crisis that threatens global energy market stability.
- Ongoing Conflict Impact: CEOs from Chevron and ExxonMobil agree that it will take months to rectify the supply/demand imbalance, suggesting that until the Middle East conflict is resolved, oil supply shortages will persist, potentially leading to increased price volatility.
- Dividend Performance Comparison: While Shell offers a 3.4% dividend yield, Chevron and Exxon have a stronger track record of dividend growth, with Chevron at 3.9% and Exxon at 2.8%, making them more attractive to investors, especially during periods of low oil prices.
- Investment Recommendations: Analysts suggest that given Chevron and Exxon's robust balance sheets and consistent dividend growth, long-term investors in the energy sector may prefer these companies over Shell, which faces greater investment risks.
See More
