Shares in Shell (SHEL) were up over 2% to £25.09 in morning trading, despite the energy giant’s full year earnings falling by a quarter due to lower oil prices.

Shell reported adjusted earnings of $28.25 billion for the full-year 2023, a 29% drop compared to its highest-ever annual profit of $39.9 billion in the same year ago period.

Jamie Maddock, energy analyst at Quilter Cheviot said: ‘While earnings are lower than they were this time last year, Shell continues to be resilient and delivered stronger results than expected. By some estimations, earnings were 20% better than expectations.

‘Much of the fall compared to last year was to be expected given the prices of oil and gas have plummeted following Russia’s invasion of Ukraine. But strong results relative to expectations have continued to be driven by the gas divisions.

‘Shareholders are being rewarded for Shell’s good relative performance compared to peers too. Its dividend was increased by 4%, in line with company policy, while the share buyback scheme being held at $3.5 billion for the quarter was a positive surprise.’

Rising global tensions and strategic shift power Shell to all-time high

SHAREHOLDERS REWARDED

Shell also boosted its dividend in pleasing news for shareholders, according to Russ Mould, investment director at AJ Bell.

‘Whatever lip service he gives to his commitment to the energy transition, CEO Wael Sawan has provided a clear indication he is prepared to prioritise returns over any commitment to net zero as he looks to close the valuation gap to US rivals.

‘Or to put it another way, investments in renewables and other forms of green energy must stand up on their own merits.

‘Integrated oil firms have a lot of moving parts so a shift to simplifying the business is a logical move by Sawan and an area where investors will want to see concrete signs of progress in 2024.

‘Shell’s biggest strength is arguably its leading position in liquefied natural gas and the whole gas market in general, given many observers see gas as playing a crucial role as the world gradually weans itself off oil and coal and moves towards greener alternatives.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell. 

The author of this article (Sabuhi Gard) owns shares in Shell.

LEARN MORE ABOUT SHELL

---