Shell to Launch $5 Billion Share Buyback After Earnings Soar — 2nd Update

By Adam Whittaker

Shell hiked its quarterly share buyback to $5 billion after earnings doubled and cash flow soared, driven by elevated oil and gas prices caused by the Middle East conflict and exceptional refining margins amid a historic fuel squeeze.

The British energy major's third-quarter adjusted earnings--a closely watched metric that strips out certain commodity price adjustments and one-time charges--nearly doubled to $10.81 billion from the $5.43 billion it reported in the same period last year. Analysts had expected $10.33 billion, according to estimates compiled by Vara Research.

Thursday's increased buyback came after Shell scaled back its quarterly repurchases earlier in the year to $3 billion from $3.5 billion.

Conflict in the Middle East has kept oil prices above $100 a barrel and gas prices high. This is despite a combination of workarounds--such as pipelines and ship-to-ship transfers-- enabling oil flows out of the Strait of Hormuz to return to preconflict levels. A geopolitical premium remains embedded in prices, with investors remaining unsure where the conflict is headed.

The U.S. has told several Gulf Arab countries to be prepared for a short, intense military campaign once the U.S. midterm elections are over, The Wall Street Journal reported Wednesday, citing people briefed on the conversations. The prospect of further military action will keep prices high and volatile--conditions that will also benefit Shell's vast trading desks, which continued their strong performance over the quarter.

Shell's refineries--where crude oil is turned into diesel, jet fuel and myriad oil products--were the standout winners of the third quarter. Its Pernis refinery in the Netherlands produced its highest monthly diesel output since 2022 in August, while its Scotford refinery in Canada hit record kerosene production in July. The changes reflect Shell reconfiguring its refineries to produce more of the products most needed in the respective regions to capture the historic margins.

Margins have weakened slightly early in the fourth quarter but the market remains tight and volatile, with only very minor demand destruction visible so far, Shell's finance chief Sinead Gorman said in a call with reporters.

Shell's margins jumped to a record level of $42 a barrel over the third quarter, far exceeding the $28.04 a barrel the company inked shortly after Russia's full-scale invasion of Ukraine in 2022 that upended energy markets.

Drone damage to Russian refineries and reduced refining activity across the Middle East have taken roughly 6 million barrels a day of refining output offline, according to oil analyst group Wood Mackenzie. The market was tightened further by Chinese export restrictions.

European gas prices soared over the quarter after the region was forced to replace lost Middle Eastern cargos by outbidding Asian customers. For those with LNG facilities outside of the Gulf, this has offered an earnings windfall. Shell, with LNG operations around the globe, benefited with earnings in its integrated gas unit jumping to $3.04 billion.

The impact of the conflict on Shell's gas unit has been mixed. One of its crown-jewel assets, the Pearl gas-to-liquids facility in Qatar, was targeted. Shell has partially restarted a section of the Pearl GTL plant to test production at one of the undamaged facilities and will place the limited amount of product into storage. It still expects to restart production at the damaged facility at the end of the first quarter next year.

Write to Adam Whittaker at adam.whittaker@wsj.com

(END) Dow Jones Newswires

October 29, 2026 05:42 ET (09:42 GMT)