Shell Share Price Rose 2.5% on High Q3 Profits, $3.5bn Share Buyback

The Shell PLC (LON: SHEL) share price rose 2.5% after the global oil major posted robust third-quarter results, reporting increased profits and announcing a new share buyback program, driving a positive trajectory in its stock performance.

Shell, headquartered in the United Kingdom, revealed earnings of $6.22 billion, marking a 23% improvement from the $5.1 billion reported in the second quarter, but was down about a third from the previous year. 

In addition to its strong financial results, the company has expressed its intent to repurchase $3.5 billion worth of shares in the fourth quarter, building on its recent repurchase of $2.5 billion worth of shares during the three months to September.

The oil and gas sector is coming off a remarkable year of profits in 2022, driven by various factors, including Russia's invasion of Ukraine, which pushed up crude oil prices. Although oil prices have since moderated from their historical highs, oil and gas producers like Shell continue to enjoy substantial profitability.

One noteworthy achievement for Shell is the successful increase in production from the second quarter, and the company has guided further production growth in the last quarter of the year. In comparison, Shell’s industry rival, BP (BP), reported relatively strong earnings earlier this week, but the results disappointed investors. 

Consequently, BP’s shares have seen a 1% decline over the past three months, while Shell's stock has notably surged by 15%. Analysts surveyed by FactSet express confidence in Shell, with 18 rating the company as a Buy and four as a Hold.

The company had previously emphasised its robust performance in natural gas trading during the third quarter, effectively mitigating the impact of lower production levels. Overall, the company experienced a 9% decrease in oil and gas output compared to the previous three months. 

This decline in gas production was primarily due to increased levels of planned maintenance at the Prelude LNG facility in Australia and ongoing works in Trinidad and Tobago. Shell noted that the maintenance activities at the Prelude facility and reduced volumes from Egypt will continue to affect LNG (liquefied natural gas) production until the end of the year.

Furthermore, Shell's positive financial results were attributed to improved refining margins, with its global metric almost doubling during the quarter. 

Shell share price. 

The Shell share price rose 2.50% to trade at 2724.5p from Wednesday’s closing price of 2658.0p.