Shell Announces a $3 Billion Buyback as Earnings Fall to $5.1 Billion

Shell reported a decline in second-quarter earnings and concurrently announced the launch of a $3 billion share buyback program. The multinational energy major's adjusted earnings for the quarter amounted to $5.07 billion, a notable decrease from the record-high of $11.47 billion achieved in the corresponding period the previous year. These figures fell short of the market consensus of $5.58 billion, which was based on estimates from 23 analysts polled by Vara Research.

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Several factors contributed to the decline in earnings, including lower results from liquefied natural gas trading and optimization, decreased realized oil and gas prices, lower refining margins, and reduced volumes, as stated by Shell.

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On the positive side, cash flow from operations, which measures the cash generated by a company from its regular business operations, increased by 7% to $15.13 billion, surpassing the market consensus of $14.62 billion. This cash flow performance included a working capital inflow of $4.8 billion.

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Net income witnessed a significant 64% drop to $3.13 billion, and this figure included net impairment charges and reversals of $1.7 billion, aligning with the factors that impacted adjusted earnings.

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Despite the challenges posed by a lower commodity price environment, Shell's Chief Executive, Wael Sawan, emphasized the company's strong operational performance and robust cash flows during the second quarter.

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To enhance shareholder value, Shell announced a $3 billion buyback program, expected to be completed by the time of the third-quarter results announcement. Additionally, another share buyback program of at least $2.5 billion is anticipated to be announced at that time.

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Regarding dividends, Shell declared second-quarter dividends of $0.331 per share, an increase from $0.25 per share in the corresponding period the previous year.

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In terms of production, Shell's second-quarter integrated gas production reached 985,000 oil-equivalent barrels per day, while liquefied natural gas volumes amounted to 7.2 million tons, and upstream production was 1.7 million barrels of oil equivalent per day. These figures aligned with Shell's expectations.

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