Shell Plc shares declined 3.9% in London trading on Thursday as investors focused on the company's decision to scale back its share buyback program, despite reporting first-quarter adjusted earnings that surpassed analyst expectations.
The energy giant reported adjusted earnings of $6.915 billion for the first quarter, exceeding consensus estimates. However, the positive earnings news was overshadowed by Shell's announcement that it would slow its share repurchase activity, a key component of its shareholder return strategy.
Shell's board declared a first-quarter interim dividend of $0.3906 per ordinary share, payable on June 29. Ordinary shares will trade ex-dividend on May 21, with American depositary shares following on May 22. The dividend represents a slight increase from the previous quarter.
Net debt rose to $52.6 billion from $45.7 billion at the end of 2025, while gearing increased to 23.2% from 20.7%. The higher leverage reflects increased working capital requirements amid volatile commodity prices. Cash flow from operations, excluding working capital swings, reached $17.2 billion, while working capital outflows totaled $11.2 billion.
Shell's $3 billion share buyback program is expected to last approximately three months, with the company planning to purchase shares on London exchanges and subsequently cancel them. The program is scheduled for completion ahead of second-quarter results, though Shell noted it may temporarily halt buybacks during documentation related to its planned ARC Resources deal.
Chief Executive Wael Sawan described the quarter's results as "strong," citing "unprecedented disruption in global energy markets." The company's chemicals and products division, which includes refining and oil trading, delivered $1.93 billion in earnings, outperforming expectations and tracking recent results from BP and TotalEnergies.
Shell guided for lower second-quarter integrated gas and LNG volumes, attributing the decline to the Middle East conflict, issues in Qatar, and scheduled maintenance. The outlook weighed on sentiment, as did broader market concerns about a potential U.S.-Iran deal that could increase oil supply.
Analysts noted that the reduction in combined dividends and buybacks, down 8% year-on-year, was overdue. Shell remains committed to total shareholder distributions between 40% and 50% of operating cash flow over time, split between dividends and buybacks.
Shell shares were trading 1.71% lower at 3,156.5 pence as of 09:24 BST. The broader European energy index also declined, with BP shares losing ground as well.
