Shell revealed a $7.7 billion first-quarter profit, significantly above analysts’ projections following interruptions in the Red Sea and Russia that boosted oil trading and refining.

The business said that it will repurchase an additional $3.5 billion of its shares at a rate comparable to that of the previous quarter over the course of the following three months. Its dividend did not alter.

Strong operational performance, notably in its liquefied natural gas division, helped offset a decline in natural gas prices that weighed on rivals’ earnings last week, including Exxon Mobil and Chevron. Shell’s cash flow increased by 6% from the previous quarter to $13.3 billion, thanks to trading.

“Shell delivered another quarter of strong operational and financial performance, demonstrating our continued focus on delivering more value with less emissions,” CEO Wael Sawan said.

Analysts had predicted first-quarter adjusted earnings of $6.46 billion, compared to $9.65 billion in the previous year, according to a new tab. The company’s excellent LNG trading profits helped it record $7.3 billion for the fourth quarter of 2023.

Adjusted earnings for Shell’s chemicals and products operations, which include oil trading and refining, increased by more than three times to $2.8 billion in the most recent quarter.

Finance head Sinead Gorman told reporters that recent drone attacks in Ukraine had caused outages at Russian refineries, which in turn had encouraged trading in refined oil products.

In addition, Shell planned refinery maintenance for the last quarter of 2023 rather than the first, which will give it an edge over competitors in the supply of oil products like diesel and petrol, according to Gorman.

At 10:55 GMT, Shell’s shares were up 1%, while the European Energy Index saw a 1.4% decrease.

“Shell has beaten expectations by a reasonable margin, despite the impact of lower gas prices during the first quarter. Earnings are up, costs have fallen, and the oil and gas major has brought debt down too – all in all, it’s a solid set of numbers,” said Stuart Lamont, investment manager at RBC Brewin Dolphin.

This year, Shell’s stock has increased by around 14% thanks to Sawan’s efforts to reduce expenses and concentrate the business on its most lucrative divisions. Reuters revealed on Wednesday that Shell has left the Chinese power industry.

Shell confirmed a strategy to reduce emissions to net zero by 2050 in March, but it also softened a 2030 carbon reduction target and dropped a 2035 aim, citing forecasts for robust gas demand and uncertainty in the energy transition.

Later this month, shareholders will cast their votes on Shell’s strategy and a resolution urging the business to impose stricter climate commitments.

Though they were 7% lower than the previous quarter’s stellar trading performance, Shell’s main LNG trading business’s earnings nonetheless exceeded forecasts.

While sales decreased by 7% to 16.87 million tonnes during the quarter, Shell’s LNG output increased by 7% over the preceding three months to 7.58 million metric tonnes. Higher output from the massive Prelude floating LNG project off the western coast of Australia was the main driver of the rise.

During the quarter, the company’s total output of petrol and oil increased by 3% to 2.91 million barrels of oil equivalent per day.

(Adapted form Reuters.com)