Shell increases earnings quarter-over-quarter to $7.3 billion

Feb. 1, 2024
Shell plc posted fourth-quarter 2023 adjusted earnings of $7.3 billion, up from $6.2 billion in third-quarter 2023, reflecting robust operational performance, strong LNG trading, and optimization results.

Shell plc increased quarterly adjusted earnings to $7.3 billion in fourth-quarter compared with $6.2 billion in third-quarter 2023, reflecting robust operational performance, strong LNG trading and optimization results.

For full-year 2023, Shell realized a $28-billion annual profit, surpassing expectations due to robust LNG trading and enabling the oil giant to raise its dividend and continue share buybacks. The company’s 2023 full year shareholder distributions reached $23 billion, in excess of 40% of CFFO (Cash Flow from Operations) for 2023.

However, the annual profit was down 30% from the prior year's record, impacted by lower chemicals and refining margins, along with a slowdown in fuel sales due to tepid global economic activity. This comes after a remarkable 2022, driven by a spike in energy prices following Russia's invasion of Ukraine.

In fourth-quarter 2023, adjusted earnings for the upstream division reached $3.1 billion, an increase from the $2.2 billion reported in third-quarter 2023, due to higher production volumes and favorable movements in non-cash deferred tax positions.

Shell's liquids production for fourth-quarter 2023 amounted to 1.36 MMboe/d, up from 1.31 MMboe/d in the third quarter. Gas production during fourth-quarter 2023 reached 2.95 Mcfd, compared with 2.56 Mcfd in third-quarter 2023. The total production for the quarter stood at 1.87 MMboe/d, an increase from the 1.75 MMboe/d reported in the previous quarter.

Integrated gas division’s adjusted earnings in fourth-quarter 2023 increased to $3.9 billion from $2.5 billion in the prior quarter, reflecting exceptional trading and optimization results combined with higher volumes. Trading and optimization results were significantly higher compared with third-quarter 2023 due to seasonality and a high number of optimization opportunities.

Marketing division’s adjusted earnings declined to $692 million from $720 million in the third quarter, impacted by lower volumes due to seasonality.

Chemicals & products division reported adjusted earnings of $83 million, down sharply from $1.38 billion in the previous quarter. Lower refining margins in the fourth quarter reflected lower global product demand as well as lower utilization due to planned maintenance activities. Chemicals margins continue to be impacted by global oversupply as well as weak demand. Trading and optimization were significantly lower than the previous quarter.

Shell’s renewables and energy solutions division reported adjusted earnings of $155 million, compared with an adjusted loss of $67 million in the third-quarter. The improvement was mainly driven by higher trading and optimization results in Europe and the Americas due to volatility and seasonal effects.

Total capital expenditure reached $24.4 billion in 2023 and is expected to be $22-25 billion in 2024. The group's spending on its renewables and energy solutions division dropped in 2023 by 23% from the previous year to $2.7 billion.