Shell plans to continue the pace of its share buybacks after reporting solid first-quarter earnings that reflected a strong oil trading result in its downstream operations.
First-quarter profit, excluding inventory valuation effects, was $9.19bn, down by just under a fifth from the previous three months but up from $5.03bn in the first quarter of 2022. Stripping out all one-off items, Shell's adjusted first-quarter profit was $9.65bn, compared with $9.81bn in last year's fourth-quarter and $9.13bn in January-March 2022. This comfortably beat analysts' expectations of $8bn.
Shell said it has completed the $4bn share buyback programme announced at its previous results. It plans to repurchase a further $4bn of shares by the time of its next results.
The company enjoyed a particularly strong result in its Chemicals and Products segment in the first quarter. The segment contributed $1.78bn to adjusted profit, more than double the previous quarter and up by over 50pc on a year earlier. The result reflected a higher contribution from trading activities, partly offset by lower refining margins, Shell said.
Refinery runs remained steady at 1.41mn b/d, compared with 1.43mn b/d in the fourth quarter of 2022 and 1.4mn b/d in last year's first quarter. Shell's global indicative refining margin for January-March fell to $15/bl from $19/bl in the previous quarter, while its global indicative chemical margin jumped to $138/t from $37/t over the same period on account of lower feedstock and utility costs.
The company's Upstream segment delivered $2.8bn of adjusted profit, down on the quarter and on the year due to lower oil and gas prices. The Integrated Gas segment saw its quarterly adjusted profit decline to $4.9bn from just under $6bn in the previous three months, reflecting lower realised prices and unfavourable deferred tax movements. But it was higher than the $4.1bn adjusted profit reported a year earlier.
Shell's oil and gas production over January-March increased by 2pc over the preceding quarter to 2.9mn b/d of oil equivalent (boe/d), although this was a flat result year-on-year. The company's Integrated Gas segment delivered a 6pc quarter-on-quarter rise in liquefaction volumes to 7.19mn t. In terms of overall LNG sales volumes, including production from third parties, Shell sold 16.97mn t during the first quarter, compared with 16.82mn t in the final quarter of 2022 and 18.29mn t in January-March last year.
For the second quarter, Shell's guidance for total oil and gas production is 2.52mn-2.78mn boe/d — with the Integrated Gas segment accounting for 920,000-980,000 boe/d and the Upstream segment making up 1.6mn-1.8mn boe/d.
