Shell Surges Forward Despite Profit Dip: LNG Growth and Share Buybacks Boost Investor Confidence

Shell reported a 4% increase in its liquefied natural gas (LNG) production from January to September 2024, reaching 22.03 million tons. The company's quarterly output was distributed as 7.6 million tons in the first quarter, 6.9 million tons in the second, and 7.5 million tons in the third. Over the first nine months, Shell's LNG sales also grew by 3%, totaling 50.32 million tons, with projections for the fourth quarter production between 6.9 to 7.5 million tons.

For the third quarter, Shell observed a modest year-over-year dip in profit, amounting to $6 billion compared to the previous quarter's $6.3 billion. This decline was prominently influenced by falling crude prices and reduced refining margins, partially offset by rising natural gas sales. Despite these challenges, the adjusted profit numbers surpassed analyst predictions set at $5.3 billion.

Shell demonstrated resilience by committing to a $3.5 billion share buyback over the coming three months and maintaining its dividend at 34 cents per share. The company's Chief Financial Officer, Sinead Gorman, noted this marks the 12th consecutive quarterly buyback of at least $3 billion, emphasizing Shell's strong balance sheet, which ensures shareholder payouts remain stable amid broader economic pressures.

The energy giant's net debt at the end of the quarter was $35.2 billion, a decline from $40.5 billion a year earlier. Additionally, Shell's debt-to-equity ratio has fallen to 15.7%, the lowest since 2015. Liquefied natural gas sales reached 17 million tons annually in Q3, contributing to a 4% rise in adjusted profits for this segment.

Growth in the oil and gas production business further supported Shell's outcomes, with profits climbing 5% due to a 2% increase in output. Robust performance in upstream and LNG activities counterbalanced a 57% profit drop in refining and chemicals, where the steep decrease in crude-to-fuel conversion margins was evident.

Shell's free cash flow jumped to $10.83 billion from $7.5 billion the previous year, while cash capital expenditure decreased to $4.95 billion from $5.65 billion. Despite the challenges in refining margins, Shell continues to leverage its diverse portfolio, ensuring solid operational results that align with its strategic objectives.