By
Darya Rudz
October 26th, 2023
Shell says it plans to reward investors further and also retrieve shares via buyback following a commendable Q3 2022.
Shell (LON: SHEL) has announced a new buyback scheme following a profitable Q3 2022 outing. In addition, the British multinational oil and gas firm plans to increase its dividend per share by around 15% for the fourth quarter.
Although Shell reported a quarterly profit for Q3 2022, the company saw its run of record quarterly earnings come to an end. This was due to lower refining and trading revenues experienced during the period ending September 30th. In the first six months of the year, Shell reported consecutive quarters of record profits as a result of surging commodity prices. The war in Ukraine largely brought about a boom in oil prices.
However, for the third quarter, Shell realized adjusted earnings of $9.45 billion. This figure was enough to match analysts’ expectations of $9.5 billion for the same period. Furthermore, it also more than doubles the $4.1 billion the London-based oil giant raked in during the same period last year. However, Shell’s commendable $9.45 billion in adjusted earnings for Q3 2022 pales in comparison to the $11.5 billion the company made in the preceding quarter.
Dividend Increment & Buyback Scheme on the Horizon
Shell’s shares are currently trading 41% up year-to-date. As a result of this and other positive company optics, the oil multinational intends to increase dividends per share by around 15% for Q4 2022. This will reportedly be paid out in March of next year.
Furthermore, Shell also looks to buy back some of its stock, resulting in an additional $4 billion in distributions. The company expects to have completed its latest buyback program by its next earnings release.
Before publishing its third quarter report, Shell had forewarned on a relatively tamer Q3 result earlier in the month. In this advance report, the company cited macroeconomic challenges such as weaker gas trading negatively impacting Q3 profitability. Furthermore, Shell also pointed to lower refining and chemicals margins as additional constraints weathered during the quarterly run. In its earnings release, Shell wrote:
“The trading and optimisation contributions were mainly impacted by a combination of seasonality and supply constraints, coupled with substantial differences between paper and physical realizations in a volatile and dislocated market.”
Shell Q3 2022 Report Comes on Heels of Previously Announced Management Shakeup
Shell’s third-quarter results also come amid a changing of the guard at top management for the company. It was announced last month that CEO Ben van Beurden will step down after helming the oil corporation for almost a decade. Furthermore, reports also stated that van Beurden’s successor would be Wael Sawan, current Shell director of integrated gas, renewables, and energy solutions. Sawan’s role as chief executive is to become effective from January 1st of next year.
The Lebanese-Canadian national already boasts of pertinent antecedents. For instance, during his 25-year career at Shell, Sawan held roles in downstream retail and various commercial projects.