- Shell increases buybacks to $3.5 bln
- LNG volumes down 4% on Prelude
LONDON, Nov 2 (Reuters) - Shell (SHEL.L) reported on Thursday a 34% annual drop in third-quarter profit to $6.2 billion as energy prices cooled, with strong trading of liquefied natural gas (LNG) helping offset a sharp drop in its production.
The company also announced share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the previous three months, and maintained its dividend unchanged at $0.331 per share.
Shell's results wrap up third-quarter earnings for the West's top energy companies which have seen profits drop sharply from last year as oil and gas prices cooled after rallying in the wake of Russia's invasion of Ukraine.
Contrasting with rival BP (BP.L), whose gas trading results weighed on quarterly profits, Shell said its earnings were supported by "favourable" LNG trading results, which were higher than in the second quarter.
Its earnings were however again hit by lower production at its flagship LNG division, which has been plagued by operational problems in recent years, particularly at its Prelude floating LNG production facility off the coast of Australia.
Production at the Integrated Gas division was down 9% from the previous quarter due to maintenance at Prelude, as well as sites in Trinidad and Tobago and in Qatar, it said.
LNG liquefaction volumes fell 4%, mainly due to higher maintenance at Prelude.
Production in the Upstream division was however up 3% from the previous quarter to 1.75 million barrels of oil equivalent per day (boed).
"Shell delivered another quarter of strong operational and financial performance," CEO Wael Sawan said in a statement.
"We continue to simplify our portfolio while delivering more value with less emissions."
Shell shares were up 1% at 0815 GMT.
Shell reported adjusted earnings of $6.22 billion, broadly in line with a company-provided analysts' forecast of $6.25 billion.
That compared with quarterly earning of $9.45 billion a year earlier and $5 billion in the second quarter of 2023.
The group tightened the upper range of its 2023 capital spending target to $23 billion-$25 billion from $23 billion-$26 billion previously.
"Results look broadly in line, but the higher buyback and a lower capex range (is) likely to be taken as a small positive," Redburn analyst Stuart Joyner said.
Sawan, who took the helm in January, vowed to revamp Shell's strategy to focus on higher-margin projects, steady oil output and grow natural gas production.
As part of the strategy, Shell announced plans to cut at least 15% of the workforce at its low-carbon solutions division and scale back its hydrogen business.
Shell said that most of its Renewables and Energy Solutions activities were loss-making in the third quarter.
Reporting by Ron Bousso and Shadia Nasralla; Editing by Jason Neely and Jan Harvey
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Ron has covered since 2014 the world’s top oil and gas companies, focusing on their efforts to shift into renewables and low carbon energy and the sector's turmoil during the COVID-19 pandemic and following Russia's invasion of Ukraine. He has been named Reporter of the Year in 2014 and 2021 by Reuters. Before Reuters, Ron reported on equity markets in New York in the aftermath of the 2008 financial crisis after covering conflict and diplomacy in the Middle East for AFP out of Israel.
Writes about the intersection of corporate oil and climate policy. Has reported on politics, economics, migration, nuclear diplomacy and business from Cairo, Vienna and elsewhere.