(Bloomberg) -- Shell Plc kept up the pace of its share buybacks after profit fell less than expected amid rising sales volumes of natural gas.
It’s the latest major oil company to maintain healthy investor returns despite reporting weaker earnings, with the outlook for the global economy deteriorating just as supply becomes more abundant. The company repurchased $3.5 billion of shares in the third quarter, matching the prior period.
“Today, we announce another $3.5 billion buyback program for the next three months, making this the 12th consecutive quarter in which we have announced $3 billion or more in buybacks,” Chief Executive Officer Wael Sawan said in a statement on Thursday.
Maintaining the flow of cash to investors has been a crucial part of Big Oil’s appeal, and companies have been punished for wavering in that commitment. Shell’s closest rival BP Plc fell 5% on Tuesday after it signaled a possible reduction in its share repurchases next year, following a drop in profit and an increase in its debt pile.
Shell’s shares rose 1% to 2,514.5 pence as of 8:16 a.m. in London trading.
The company’s gearing, the ratio of net debt to equity, dropped to 15.7% in the quarter, the lowest since 2015. The strength of Shell’s balance sheet gives it better visibility on shareholder distributions regardless of broader macroeconomic conditions, Chief Financial Officer Sinead Gorman said on a call with reporters.
“In contrast to BP’s less favorable performance, Shell’s operational strength in integrated gas and upstream divisions has bolstered earnings, allowing for continued shareholder returns,” Neil Shah, an analyst at Edison Group, said in a note.
Shell’s adjusted net income was $6.03 billion in the third quarter, down from $6.22 billion a year earlier and beating the average analyst estimate of $5.39 billion.
Crude prices slumped 17% in London through the period, while profit margins on refined fuel shrank and the chemicals businesses of some companies lost money. TotalEnergies SE reported a bigger-than-expected drop in profit on Thursday amid this broader weakness in oil markets.
Shell was able to offset these headwinds by expanding sales of natural gas. In the first nine months of the year, earnings in this business were 47% higher than in 2023, driven by greater production and sales volumes of liquefied natural gas.
--With assistance from Will Kennedy.
(Updates with analyst comment in seventh paragraph.)
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