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Shell shareholders cash in as North Sea giant rakes in billions

Great news for the UK economy or 'one of the great scandals of our time"?

Shell logo alongside oil barrels and dollar bills.
Image: DCT Media/Shutterstock

Energy giant Shell is ploughing more cash into the pockets of shareholders after making nearly £9. 3 billion in pre-tax profits during the three months to September 30.

The figure is slightly lower than the £9.37bn reported for the same quarter a year ago.

But it was still worth more than £1.4 million an hour to one of the biggest players in the North Sea oil and gas industry.

Shares in the company were up by more than 4% by market close today, to £27.68, after it said it was boosting returns for investors.

Investors will pocket £18bn this year

The Q3 dividend is worth abut 27p per unit of stock, while Shell also announced a fourth share buyback for 2023.

Total cash returns to investors are exected to reach and perhaps exceed £18bn this year.

Russ Mould, investment director at financial services firm AJ Bell, said: “Shell is keeping a tight grip on capital expenditure, but it is getting more out of its hydrocarbon assets by way of production and that is helping the firm to make the most of oil prices in particular.”

Inflation-busting cash bonanza for Shell’s shareholders

The £18bn cash bonanza for shareholders is higher than the current rate of inflation, Mr Mould noted, adding: “Environmental campaigners may despair, but these numbers help to explain why Shell’s shares trade near their all-time high, even though oil and gas prices are below where they were a year ago and production growth has been relatively modest.

“Shell seems to be reaping the benefits of a renewed strategic focus on hydrocarbon production, as laid down by boss Wael Sawan when he took over at the turn of the year.”

Shell's UK North Sea Shearwater production hub.
Shell’s UK North Sea Shearwater production hub. Image: Shell

Stuart Lamont, investment manager in the Aberdeen office of financial services firm RBC Brewin Dolphin, said: “Shell’s results are a contrast with BP’s earlier this week, more or less matching expectations on the back of rising profits.

“Comparisons with last year, when oil prices first began their surge, were always going to be tough, but the company has managed to deliver.

“With the geopolitical environment still volatile, oil prices look likely to continue recent rises – which should mean a strong final quarter for Shell.”

People are sick of being ripped off by the likes of Shell”

Tessa Khan, Uplift

Tessa Khan, executive director of Uplift, which campaigns for a “just and fossil fuel-free UK” was less impressed.

“People are sick of being ripped off by the likes of Shell, she said, adding: “It’s obvious from looking at our heating bills and petrol receipts that these profits are coming out of our pockets.

“Firms like Shell spend a lot of money persuading us that they are shifting to renewables – which would lower energy costs – when in fact this makes up a fraction of investment, with the majority remaining in fossil fuels.

“This figure won’t change while the government keeps handing out new oil and gas licences.”

Tessa Khan, of Uplift.
Tessa Khan, of Uplift. Image: Uplift

Unite the Union general-secretary Sharon Graham said “It’s time to stop companies like Shell making a killing at our expense. Profiteering on this magnitude is one of the great scandals of our time.”

Shell’s preferred profits metric, adjusted earnings before interest, taxes, depreciation, and amortisation, was down by more than one-third in Q3, compared with a year earlier, at just over £5bn.

But the figure is nearly 23% higher than that reported for the second quarter of 2023.

Unite the Union general-secretary Sharon Graham.
Unite the Union general-secretary Sharon Graham: “Profiteering on this magnitude is one of the great scandals of our time.” Image: Jacob King/PA Wire

Total revenue and other income in the latest quarter was £63.85bn, up by 2.6% from Q1 but down from £80.8bn a year ago, meeting analysts’ expectations.

Shell reported global upstream production totalling 1.753 million barrels of oil equivalent for Q3 2023, down from 1.701m in Q2.

Mr Sawan, chief executive, said: “Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets.

“We continue to simplify our portfolio while delivering more value with less emissions.”

Stability Shell
Shell CEO Wael Sawan

Sawan maintains profit focus

Mr Sawan took the helm at the energy giant at the start of the year and has set about refocusing the group on its core oil and gas business to improve returns to investors.

In addition to shedding its consumer energy arm, last week the company confirmed plans to cut about 200 positions from its global low-carbon solutions business in 2024.

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