Company initiates substantial share repurchase following positive earnings report
Shell Goes on $3.5B Share Buyback Spree
shell plc, the multinational oil and gas giant, has announced a $3.5bn (€3.1bn) share repurchase for the following three months, making this the fourteenth consecutive quarter where the company has splashed out on share buybacks worth at least $3bn (€2.7bn). This latest move comes hot on the heels of the company's robust first quarter 2025 earnings report, which saw an adjusted profit of $5.6 billion (€5bn), up 52% from the previous quarter.
Although these figures beat market expectations of $5bn (€4.4bn), they still represent a 27% decrease from the same quarter in 2024. The company's net debt stood at $41.5bn (€36.6bn) in the first quarter of the year, a rise partially attributed to lease additions related to the Pavilion Energy acquisition.
Free cash flow dropped from $9.8bn (€8.7bn) in the first quarter of 2024 to $5.3bn (€4.7bn) in Q1 2025, primarily due to the fall in oil prices. The company's integrated gas division recorded adjusted earnings of $2.5bn (€2.2bn) in the first quarter of the year, while its Upstream division brought in $2.3bn (€2bn). The chemicals and products branch reported an adjusted earnings figure of $449 million (€396.6m) for the three months of the year.
Wael Sawan, Shell plc's CEO, commented in the first quarter earnings press release on the company's website: "Shell shone once more in the first quarter of 2025. We further fortified our leading LNG business with the completion of the Pavilion Energy acquisition, and fine-tuned our portfolio with the completion of the Nigeria onshore and Singapore Energy and Chemicals Park divestments. Our solid performance and robust balance sheet give us the audacity to initiate another $3.5 billion (€3.1bn) of buybacks for the next three months, in line with the strategic roadmap we outlined at our Capital Markets Day in March."
Shell under Fire for Diminished Climate Goals
Critics have lashed out at Shell for pulling back considerably on its climate commitments, particularly after abandoning its carbon reduction target of 45% by 2035 in 2023. This move has been deemed as weakening the company's climate accountability by critics, even though Shell maintains long-term net-zero ambitions by 2050. However, the company's current operational plans only explicitly address Scope 1, 2, and NCI targets over the next ten years, with the 2050 target lying outside its three-year operational planning and ten-year outlook framework.
Charlie Kronick, senior climate adviser for Greenpeace UK, stated in an email note: "Shell has raked in billions in profits this week, all while the UK government grapples with the massive financial repercussions of extreme weather events like floods, wildfires, and heatwaves. It's unacceptable to force households and businesses to bear the brunt of the damage while oil giants like Shell rake in the profits. It's high time for policymakers to impose new taxes on the most polluting companies and use those funds to help communities recover from climate-related disasters, as well as protect the UK better against the climate crisis and enhance emergency services."
Kronick underlined that authorities should levy new taxes on polluting companies and allocate those funds towards aiding communities in recovery from extreme weather events, as well as shielding the country better against the climate crisis and enhancing emergency services.
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Enrichment Insights:While Shell has kept faith with its long-term net-zero goals by 2050, the recent action of dropping the interim 2035 carbon reduction target has raised concerns about its commitment to climate change targets. The company's strategy currently only explicitly tackles Scope 1, 2, and NCI targets over the next decade, falling outside the three-year operational planning and ten-year outlook framework. This raises questions about whether the 2050 target remains achievable within the current strategic direction, as some investors demand proof that the strategy serves as a "bridge to net zero" rather than merely prolonging reliance on fossil fuels. Critics argue that Shell's focus on LNG expansion creates financial risks, particularly with regards to uncontracted volumes, if future climate policies restrict the use of fossil fuels. Additionally, shareholders are increasingly calling for clarity on whether LNG investments represent transitional energy sources or long-term liabilities.
- Despite Shell's robust earnings and share buyback announcements, critics have accused the company of weakening its climate accountability by abandoning a target to reduce carbon emissions by 45% by 2035.
- Wael Sawan, Shell's CEO, highlighted the company's resilient performance and solid balance sheet, linking it to the initiation of another $3.5 billion buyback spree.
- In the face of Shell's growing profits and share buybacks, Charlie Kronick, a senior climate adviser for Greenpeace UK, called for new taxes on polluting companies to fund recovery from extreme weather events and enhance emergency services.
- Shell's current strategy focuses on Scope 1, 2, and NCI targets over the next decade, raising doubts about its ability to meet long-term net-zero ambitions by 2050, as questioned by investors and critics.
