Supermajor Shell saw its fourth-quarter profits nearly halve, with a 49% decline year-on-year, primarily due to weaker oil and liquefied natural gas (LNG) trading, exploration write-offs, and higher taxes.
Key Financial Highlights
• Q4 Adjusted Earnings: $3.66 billion, down from $7.31 billion in Q4 2023.
• Analyst Expectation: Shell’s earnings fell 11% below analyst consensus, which forecasted $4.1 billion (Vara Research).
• Cash Flow from Operations: $13.2 billion in Q4; $54.7 billion for 2024 (second-highest in company history).
• Capex for 2024: Reduced to $21.1 billion, down from the previously guided $22-$25 billion range.
Key Factors Behind the Drop
1. Weaker Trading Performance
• Lower crude oil and product margins.
• Decline in LNG trading and optimizations.
• Scheduled maintenance at Qatar’s Pearl gas-to-liquids asset impacted production.
2. Exploration Write-Offs
• Shell wrote off exploration costs for its deepwater discoveries in Namibia’s Orange Basin, declaring them uneconomic.
• This resulted in an additional $283 million in costs for the quarter.
3. Higher Tax Burden
• Unfavorable tax movements added $245 million in costs.
CEO’s Response & Shareholder Returns
Despite lower earnings, Shell is maintaining its shareholder-focused approach:
• Dividend per share: Increased by 4% to $0.358.
• New Share Buyback: $3.5 billion buyback program announced (13th consecutive quarter of at least $3 billion in buybacks).
CEO Wael Sawan stated:
“Today, we announce a 4% increase in our dividends and another $3.5 billion buyback programme, all whilst further strengthening our balance sheet to position us well for the future.”
