Shell shares slump after earnings rocket on oil surge
Shell kicked off a mega share buyback following a bumper first quarter that breezed past expectations on the back of booming oil trading.
The FTSE 100 oil major recorded earnings of $6.9bn (£5bn), cruising past the consensus pencilled in by analysts of $6.4bn. It also marked a significant uplift on the $3.3bn pocketed in the final quarter of 2025.
Still, shares in the firm slumped over two per cent on open to 3.135,50p.
The blue-chip firm cited higher energy prices and lower operating costs for the jump in earnings. Shell had previously signalled it expects its chemical and products business, which includes oil trading, to be “significantly higher” than the previous quarter.
It comes after oil breached a four-year high of $126 a barrel only a few weeks ago. The price of crude has continued to climb after the conflict in the Middle East choked supply, with traffic through the Strait of Hormuz, where a fifth of the world’s supply flows through, becoming halted.
Shell’s upstream segment – which covers crude oil, natural gas and natural gas liquids – delivered a $1.2bn jump in the first quarter, taking earnings to $2.4bn. This was up from $1.6bn in the previous quarter.
It also came despite production slipping slightly to 2,752 thousand barrels of oil equivalent per day. This was a touch down from 2,859 in the previous quarter.
Following the boom in earnings, Shell kicked off plans for a $3bn buyback and hiked its dividend five per cent to $0.39. The combined impact is expected to take shareholder returns to $5.3bn in the quarter.
Gas production takes a hit from strikes
Mark Crouch, market analyst for eToro, said: “Shell has demonstrated how rapidly war and geopolitical instability can reshape global energy markets.
“During the pandemic, the industry grappled with collapsing demand, overflowing storage tanks and negative oil prices. Today, the dynamic is almost entirely reversed. Strategic reserves are tighter, inventories have been significantly drawn down and energy security has re-emerged as a central concern for governments and markets alike. Continued”
Despite the Middle East conflict helping feed into a jump in earnings through rising energy prices, gas output faced a knock in the first quarter for the same reason.
Total production fell by 4 per cent in integrated gas, following the shutdown of its PearlGTL site in Qatar. The site was hit during the Iranian attacks in the region, which also affected liquefied natural gas facilities owned by Shell.
Last month Shell inked a deal to buy Canadian energy firm ARC Resources for $16.4bn. The firm said it would strengthen its gas production and reserves “for decades to come”.
The oil giant said it expects cash capital expenditure for the full year to come in between $24bn and $26bn – an increase from $21bn the year prior – largely due to the ARC acquisition.