Shell on Thursday raised its fourth-quarter dividend by 4% and announced a new share buyback program even as it reported earnings below expectation for the last quarter of 2024.
The UK-based oil and gas supermajor booked $3.66 billion in adjusted earnings for the fourth quarter, below the analyst estimate of around $4 billion, and down from the $6 billion for the third quarter of 2024.
The fourth-quarter earnings reflect lower prices and margins, higher exploration well write-offs, and the non-cash impact of expiring hedging contracts on LNG trading and optimization results, the company said.
Earlier this month, Shell had already warned that its LNG production and trading and oil trading businesses were set to book significantly lower results for the fourth quarter of 2024, due to seasonality and timing of lifting.
The chemicals and products division even slipped to a $200-million loss from earnings of $500 million for the third quarter, due to “significantly lower contribution from trading and optimisation, including seasonality effects, and continued weak chemicals margin environment,” Shell said.
Full-year 2024 adjusted earnings, Shell’s preferred metric for net profit, fell to $23.7 billion from $28.25 billion in the previous year.
However, cash flow from operations (CFFO) remained resilient in both Q4 versus Q3, and for the full year compared to 2023. CFFO for the whole of 2024 hit $54.68 billion, slightly higher than $54.19 billion for 2023.
“2024 was another year of strong financial performance across Shell. Despite the lower earnings this quarter, cash delivery remained solid and we generated free cash flow of $40 billion across the year, higher than 2023, in a lower price environment,” CEO Wael Sawan said.
Shell is increasing dividend per share by 4% to $0.358 for the fourth quarter, while commencing a $3.5 billion share buyback program expected to be completed by the Q1 2025 results announcement in the spring.
The buyback program is the 13th consecutive quarter of at least $3 billion of share repurchases, Shell said.
The higher dividend and new buyback reaffirm the priority of the company, and other Big Oil firms, to return more cash to their shareholders and boost share prices.
At Shell, distributions to shareholders were $22.6 billion in 2024, representing 41% of CFFO generated last year.
Oilprice.com