Energy Giant Shell Misses Q3 Revenue Estimates; Announces $2.5B Buyback Program

Shell PLC SHEL reported a third-quarter FY23 revenue decline of 20.3% year-over-year to $76.35 billion, missing the consensus of $82.96 billion. 

Adjusted earnings per ADS for the quarter was $1.86, above the consensus of $1.83.

Net income attributable to Shell plc shareholders increased by 4.5% Y/Y to $7.04 billion and +125% sequentially.

The company stated that the sequential increase mainly reflects higher refining margins, higher realized oil prices, higher LNG trading and optimization results, and higher Upstream production, partly offset by lower Integrated Gas volumes.

Adjusted earnings increased 23% sequentially, and Adj. EBITDA increased 13% Q/Q to $16.34 billion (-24% Y/Y), driven by the same factors as income attributable to Shell plc shareholders.

Cash flow from operating activities year-to-date totaled $41.52 billion (-10% Y/Y), and Free cash flow was $29.54 billion.

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At the end of Q3, net debt was $40.5 billion. Gearing was 17.3%, in line with the end of 2Q23.

For the quarter, total shareholder distributions were $4.9 billion, comprising share repurchases of $2.7 billion and cash dividends of $2.2 billion.

Total production at Integrated Gas slid 2.6% Y/Y to 900 kboe/d and Upststream fell by 2% Y/Y to 1,753 kboe/d.

Meanwhile, sales volumes at Marketing rose 2.8% Y/Y to 2,654 thousand b/d, and at Chemical & Products +4.13% to 2.99 thousand tonnes from 2.89 thousand tonnes.

Buyback: Shell also announced the commencement of a $3.5 billion share buyback programme. The programme will be completed prior to Q4 2023 results announcement, scheduled for February 1, 2024.

FY23 Outlook: The company revised its outlook for 2023 cash capital expenditure to $23 billion-$25 billion from $23 billion-$26 billion.

It expects Q4 production at Integrated Gas to be approximately 870 - 930 thousand boe/d and Upstream to be about 1,750 - 1,950 thousand boe/d.

The company projects Q4 Marketing sales volumes at approximately 2,250 - 2,750 thousand b/d. 

Price Action: SHEL shares are trading higher by 2.97% Y/Y at $67.33 on the last check Thursday.