Shell Keeps $3.5 Billion Buyback Despite Slide in Earnings -- 2nd Update

By Adam Whittaker

Shell maintained its $3.5 billion quarterly buyback despite lower oil prices hitting earnings.

Energy companies are positioning themselves for a period of weaker prices amid stunted growth in oil demand and high supply. That has put pressure on returns, but Shell's stronger balance sheet relative to peers means its shareholder returns have been more resilient.

This quarter's buyback is the British energy major's 17th consecutive quarter buying back at least $3 billion in shares. European peers BP, TotalEnergies slowed the pace of their buybacks last year, while Equinor cut its 2026 buyback Wednesday.

Weaker prices were among the factors that dragged Shell's fourth-quarter adjusted earnings--a closely watched metric that strips out certain commodity-price adjustments and one-time charges--down to $3.26 billion from $5.43 billion in the preceding quarter, missing the $3.51 billion that analysts polled by Vara Research had expected.

The prospect of additional supply flowing into the market from Venezuela after U.S. intervention in the country has added to the challenging price outlook.

Shell first entered the South American country in 1914, and its Dragon gas-field project lies in Venezuelan territorial waters. The company has partnered with Trinidad & Tobago's national gas company and wants to continue developing the project, Shell finance chief Sinead Gorman said Thursday.

The company is interested in Venezuela as an investment and trading opportunity, and continues to monitor the situation quite closely, Gorman said.

While investors have tended to focus on shareholder returns in recent years, attention is shifting toward portfolio longevity, an area where Shell is weaker than peers, RBC Capital Markets analysts Biraj Borkhataria and Adnan Dhanani wrote in a recent note to clients.

Shell's reserve life--which measures how long existing reserves would last at current production rates--fell to 7.8 years from 8.9 years in 2024 after it sold some assets. This will likely fuel questions from investors as to how the company could use mergers and acquisitions to boost its reserves, the analysts said.

Shell had previously warned that a weak oil-trading performance would hit its earnings. The significantly lower performance pushed its chemicals-and-products division into an adjusted loss of $66 million. The division had reported a $550 million profit in the prior quarter.

Within its core integrated-gas division, earnings fell on quarter due to higher tax charges. Higher volumes did help offset the weaker prices, Shell said.

Shell has made cutting costs and capital discipline a core pillar of its strategy to win over investors. It has, to date, delivered $5.1 billion of structural cost reductions since 2022, which is ahead of its planned cuts of $5 billion to $7 billion by 2028, it said.

Write to Adam Whittaker at [e-mail]

(END) Dow Jones Newswires

02-05-26 0515ET