Oil giant Shell launches $3.5 billion share buyback as profit beats

British oil major Shell on Thursday reported stronger-than-expected third-quarter profit, citing robust operational performance and higher trading contributions.

Shell posted adjusted earnings of $5.4 billion for the quarter, beating analyst expectations of $5.05 billion, according to an LSEG-compiled consensus. A separate, company-provided analyst forecast had put Shell’s expected third-quarter profit at $5.09 billion.

The London-headquartered firm reported adjusted earnings of $6 billion over the same period last year and $4.26 billion for this year’s April-June period.

“Shell delivered another strong set of results, with clear progress across our portfolio and excellent performance in our Marketing business and deepwater assets in the Gulf of America and Brazil,” Shell CEO Wael Sawan said in a statement.

The company also announced another $3.5 billion in share buybacks over the next three months, maintaining the pace of its shareholder returns. The company said it marked the 16th consecutive quarter of at least $3 billion in buybacks.

Shell’s net debt came in at $41.2 billion at the end of the third quarter, down from $43.2 billion on a quarterly basis.

The oil major’s London-listed share price finished Thursday’s session up 0.2%. The stock price is up more 16% year-to-date, outperforming its industry peers.

“Numbers are solid in virtually all divisions and shows earning growth and strong cash flow generation,” said Maurizio Carulli, global energy and materials analyst at Quilter Cheviot.

“Of note the robust production in Brazil and the Gulf of Mexico. The LNG Canada ramp up, with an initial 13 cargos in Q3, benefited the results as well. The only weak part was Chemicals, but it is a small part of the business and Shell’s management is trying to find a strategic solution for it,” Carulli said.

Other third-quarter highlights included:

• Adjusted earnings fell 9.9% compared to the same period last year.
• Cash flow from operations (CFFO) came in at $12.2 billion for the third quarter, compared to $14.7 billion in the same period last year.
• Cash capital expenditure for the quarter stood at $4.9 billion.

Shell’s results come as French oil major TotalEnergies reported a slight drop in third-quarter profit as oil and gas production growth helped to offset lower crude prices.

Norwegian energy firm Equinor, for its part, on Wednesday posted a steeper-than-expected drop in third-quarter profit, with adjusted operating income coming in at $6.21 billion for the July-September period.

U.S. oil giants Exxon Mobil and Chevron are both scheduled to report third-quarter results on Friday, with Britain’s BP set to follow suit on Tuesday.

Analysts expect Big Oil’s shareholder payouts to come under pressure over the coming months, with energy majors looking to tighten their belts amid a weaker crude price environment.