The results mark a notable contrast with British rival BP, which recently scaled back its buybacks in a bid to strengthen its balance sheet amid investor unease.
Share Buybacks a Key Priority
Despite the dip in earnings and weaker oil and refining margins, Shell’s Chief Financial Officer, Sinead Gorman, emphasized that current market conditions make continued buybacks attractive.
“If my share price falls — and I already believe the share price was undervalued — I therefore have an even better ability to allocate capital there and buy back even more shares,” she told analysts during a call.
This marks the 14th consecutive quarter that Shell has allocated at least $3 billion to share repurchases.
Shell’s gearing — a measure of debt as a percentage of capital — currently stands at 18.7%, significantly lower than BP’s 25.7%, reinforcing its relative financial stability.
Market Reaction and Performance Breakdown
Following the earnings report, Shell shares rose 2.8% in early trading, outperforming the broader energy sector index, which gained 1.1%.
The company’s indicative refining margin was $6.2 per barrel in Q1, a modest increase from $5.5 at the end of 2024, but sharply down from $12 a year earlier. This decline reflects a broader slowdown in refining profitability across the sector.
Brent crude prices, the global oil benchmark, averaged about $75 per barrel during the quarter, down from $87 a year ago. As of Friday, Brent was trading near $62 — still above Shell’s breakeven level for dividends, which the company says is $40 per barrel.
Shell has pledged to maintain shareholder returns even if oil prices dip to $50.
Strategy and Outlook
In its March strategy update, Shell signaled a more conservative investment approach, lowering its annual capital expenditure guidance to $20–$22 billion through 2028. It also flagged a possible review of its chemicals business and hinted at longer-term decisions about underperforming assets.
Gorman confirmed that the company would take the rest of the decade to evaluate potential closures or divestments within its chemicals portfolio.
The company’s gas trading division remained resilient, despite some losses from expiring hedging contracts. In contrast, BP reported weaker gas trading results that contributed to a disappointing quarter.
“We were able to route several cargos to more profitable destinations. And I think we were just on the right side of it. Our traders in LNG are doing a superb job,” Gorman said.
A Resilient Position in a Volatile Market
Despite the challenges of lower commodity prices and tighter refining margins, Shell continues to demonstrate capital discipline and a firm commitment to shareholder returns. Its strong trading performance, disciplined investment outlook, and cautious optimism about long-term LNG demand place it in a favorable position as it navigates global energy market volatility.