Shell Posts Better-Than-Expected Q2 Earnings Amid Lower Oil and Gas Prices.

Shell posted Q2 earnings of $4.26 billion, down 24% from Q1 and 32% YoY, beating analyst estimates of $3.7 billion. The company cited reduced expenses and higher marketing margins as offsets to lower oil and gas prices and weaker trading results. CEO Wael Sawan attributed the strong cash flows to operational performance in a challenging market, and the company announced a $3.5 billion buyback plan for the next three months. Shell's shares rose 3% after the earnings release.

Shell Plc (SHEL.L) reported a 24% drop in quarterly earnings to $4.26 billion for the second quarter of 2025, down from $5.6 billion in the first quarter and $6.2 billion in the same period last year. The earnings, which beat analysts' expectations of $3.7 billion, reflect the company's ability to navigate a challenging market environment [1].

The reduction in earnings was primarily driven by lower oil and gas prices, weaker trading results, and outage-related losses from its chemicals operations. However, Shell's finance chief Sinead Gorman attributed the strong cash flows to operational performance in a challenging market. The company recorded $11.9 billion in cash flow from operations, down from $13.5 billion a year ago [1].

Shell maintained its pace of share buybacks at $3.5 billion for the quarter, the 15th consecutive quarter of at least $3 billion. The company's shares rose around 3% after the earnings release, outperforming a 0.3% rise in a broader index of European energy companies [1].

CEO Wael Sawan highlighted the company's position as the world's leading liquefied natural gas (LNG) trader and its strategic focus on LNG sales growth. Shell's LNG division was one of the few bright spots in the latest Q2 results, with sales rising from 16.5 megatonnes (MT) in the first quarter to 17.8MT in the second [2].

Shell's adjusted earnings of $4.5 billion for the second quarter were down from $5.6 billion in the first quarter of 2025, with half-yearly earnings totalling $9.8 billion. CEO Wael Sawan noted that geopolitical and economic uncertainty continue to have a knock-on effect on commodity prices and margins [2].

The company has committed $10–15 billion between 2023 and 2025 to low-carbon projects, including biofuels, hydrogen, and carbon capture and storage (CCS). In Q1 2025 alone, its Renewables and Energy Solutions segment reported $111 million in adjusted EBITDA—a stark contrast to the $123 million loss in Q4 2024 [3].

Shell's buyback program, which is part of a broader plan to return 30–40% of cash flow from operations (CFFO) to shareholders, aligns with a sector-wide trend among European oil majors to prioritize capital efficiency. However, the company's net debt increase and gearing rise suggest that returns are being prioritized over reinvestment in low-carbon infrastructure [3].

References:
[1] Reuters. "Shell profit drops by almost third on lower prices, beats expectations." July 31, 2025. https://www.reuters.com/business/energy/shell-profit-drops-by-almost-third-lower-prices-beats-expectations-2025-07-31/
[2] Gasworld. "Shell LNG sales rise but profits plunge by a third." July 31, 2025. https://www.gasworld.com/story/shell-lng-sales-rise-but-profits-plunge-by-a-third/2162508.article/
[3] AInvest. "Shell $3.5 billion buyback: Profit decline, strategic move, or warning sign?" July 31, 2025. https://www.ainvest.com/news/shell-3-5-billion-buyback-profit-decline-strategic-move-warning-sign-2507/