Shell Reports Record Refining Margins, Boosts Buybacks

Shell posted adjusted earnings of $10.81 billion for the third quarter, nearly doubling the $5.43 billion reported in the same period last year. The company announced the results on Thursday, citing a surge in refining margins that hit a record level amid ongoing geopolitical conflict.

Indicative refining margins reached $42 per barrel, shattering the previous record of $28.04 set in the second quarter of 2022. This performance exceeded the $9.92 billion consensus estimate compiled by LSEG. CEO Wael Sawan attributed the results to strong operational performance despite what he described as continued severe disruption to the global energy system.

The company increased its financial commitment to shareholders by announcing a $5 billion share buyback program. This initiative will be completed over the next three months, an increase from the $3 billion allocated in the prior quarter. Shell’s London-listed shares rose approximately 3% in morning trade, reaching an all-time high.

Free cash flow climbed to $16.3 billion, up from $10 billion in the year-ago quarter. Net debt decreased to $39.7 billion from $41.75 billion in the previous quarter. The company also lowered its 2026 capital expenditure outlook to a range of $23 billion to $25 billion, down from the previous $24 billion to $26 billion projection.

Maurizio Carulli, an equity research analyst at Quilter Cheviot Investment Management, noted that the debt reduction was notable given Shell’s recent $16.4 billion acquisition of Canadian energy firm ARC. He stated that while the performance was impressive across divisions, he expects smaller bolt-on acquisitions rather than a major portfolio reshaping. Shell has recently sold its Indian wind and solar business and is reportedly seeking to divest its UK-based chemicals joint venture with Exxon.

Market conditions drove these financial results as crude oil prices remained volatile. Brent Crude traded at approximately $114 per barrel on Thursday, up from $65 a year earlier. This spike followed curtailments in Gulf exports due to the U.S.-Israeli war with Iran and attacks on shipping in the Strait of Hormuz. TotalEnergies also reported a more than doubling of adjusted net income to $9.1 billion, with CEO Patrick Pouyanne citing historically high refining margins.

A global shortfall in refining capacity, worsened by strikes on Russian refineries, has increased the prices of gasoline, diesel, and jet fuel. The Group of Seven nations agreed earlier this month to release emergency diesel stocks in response to rising consumer costs.