Oil giant Shell beats expectations despite sharp drop in profit

Britain’s Shell on Thursday reported better-than-expected second-quarter profit and maintained the pace of its shareholder returns, despite the impact of lower global oil and gas prices.

The energy giant posted adjusted earnings of $4.26 billion for the three months through June, beating analyst expectations of $3.87 billion, according to an LSEG-compiled consensus.

A separate, company-provided analyst forecast had expected Shell’s second-quarter profit to come in at $3.74 billion.

Shell reported adjusted earnings of $6.29 billion over the same period last year and $5.58 billion in the first three months of 2025.

The results come shortly after the London-listed firm flagged weaker trading results at its integrated gas division and losses at its chemicals and products arm.

Shell also announced another $3.5 billion in share buybacks over the next three months, keeping the pace of its shareholder returns. It marks the 15th consecutive quarter of at least $3 billion in buybacks.

“The backdrop of the macro has been challenging, and what I would say is we continue on the momentum that we have in transforming Shell,” CEO Wael Sawan told CNBC’s “Squawk Box Europe” on Thursday.

“On all measures, [I’m] pleased with that performance. And on the trading side, indeed, despite difficult macro, pleased with how the team has performed,” Sawan said.

Shares of Shell were up 2.5% at around 9 a.m. London time (4 a.m. ET).

In March, Shell announced plans to prioritize shareholder returns, ramp up the cost of savings and double down on its liquified natural gas (LNG) push. The strategic update was designed to bolster its commitment to value creation, while maintaining focus on “performance, discipline and simplification.”

The plan appears to have been well received by investors. Shell’s share price has outperformed many of its European and U.S. rivals so far this year, notching gains of 8%. By comparison, Britain’s BP is up 3%, France’s TotalEnergies is down 2% and Exxon Mobil is up 4% over the same period.

Notably, Shell recently dismissed speculation about a possible takeover bid for BP, saying in late June that it had “no intention” of making an offer for its struggling domestic rival.

Asked about the prospect of acquisitions and whether the current state of play means bigger is better for oil companies, Sawan replied: “I don’t buy bigger is better. I think you have to drive it from a value perspective.”

Shell’s CEO said scale is not of concern for the world’s largest trader of liquified natural gas (LNG).

“It is how do we leverage that scale by focusing on the areas where we have competitive strengths and the areas where can create value,” he addd.

Shell on Thursday said that it achieved structural cost reductions of $800 million through the first six months of 2025, bringing cumulative reductions since 2022 to $3.9 billion. Earlier in the year, the company set a cost reduction target of $5-7 billion by the end of 2028.  

The company’s net debt, meanwhile, came in at $43.2 billion at the end of the second quarter, up from $41.5 billion on a quarterly basis.

Shell’s Sawan repeated his comments from earlier in the year when asked about the prospect of the company moving its listing from London to New York, saying it is not a live discussion.

“Part of the reason is actually we have been outperforming. We have been able to just stick to our own story, just deliver on what we say we’re going to do. At Capital Markets Day we used the old tag line: ‘You can be sure of Shell,'” Sawan said.

“On the back of that, we feel more and more confident that our message is getting through to those pools of capital that want to invest in this differentiated investment thesis that we have,” he added.