Shell announces $3.5 billion share buyback in response to AGM’s showdown on emissions

Shell is set to buy back shares worth $3.5bn in the coming quarter, after its first-quarter profits were higher than expected at almost $8bn.

The company said it would pay out multi-billion dollar payouts to investors as it prepared for a shareholder fight over its climate agenda during its annual general meeting at the end of this month.

Shell’s “staggering” cashflows resulted to earnings adjusted of $7.7bn in the first quarter. This is below the $9.6bn earned during the same period last year, but well above the $6.5bn forecast by analysts.

Wael Sawan said that the results announced on Thursday gave the company confidence to launch a $3.5bn share buyback program for the next 3 months. The company’s first-quarter payouts to shareholders totalled $5bn. Dividends accounted for $2.2bn and share buybacks accounted for $2.8bn.

The oil firm reported a profit of $28 billion in 2023, exceeding expectations. Shell paid £1.1bn overall in tax in the UK in 2023. Of this, £240m were taxed as part of the government’s windfall levy, also known as the Energy Profits Levy.

Ed Miliband said, Labour’s shadow minister for energy and climate, “These results demonstrate yet again how it is so damning that Rishi Sunak has refused to introduce a windfall tax against the oil and gas companies. These companies have made record profits to the detriment of workers. Labour says that we should tax these companies fairly to invest in clean, home-grown energy which will help end the cost of life crisis and make Britain more energy independent.

Some shareholders are increasing pressure on the oil company to reduce its carbon emissions despite the payouts. Shell has been warned by a group that includes Amundi French Asset Manager, Axa Insurance and National Employment Savings Trust of the UK Government.

It has been claimed that the company is lowering its green ambitions to boost its valuation by increasing its liquified gas business, and keeping its oil production rate constant for the remainder of the decade. Shell’s most recent results show that overall oil and natural gas production increased by 3% to 2,91m barrels equivalent per day.

Follow This, a campaign group that coordinates large European investors, will bring a climate-related resolution to Shell’s AGM in order to pressure the company to reduce emissions.

Mark van Baal said, “Large investors hold the key in tackling climate change with their votes during shareholders’ meetings. Shell will change only if more shareholders vote to change. The resolution was designed to give Shell shareholders a mandate to drive energy transition.

This year, the company announced that it would slow down the pace of emissions reductions in this decade. It has set a new goal to reduce carbon emissions intensity by 15-20% of energy sold by the end decade compared to its previous target of 20 %. Shell’s stock price has improved in comparison to European rivals, including BP, because of the plan and cost-cutting measures from its low carbon business units.

Shell’s shares reached a new record of over £29 per share this week. This was partly due to the geopolitical turmoil of recent years, which has supported higher oil and gas prices. But , the company, believes that it is worth.

Ben van Beurden , its former chief executive, stoked fears last month , that the oil firm would leave the London Stock Exchange for a New York Listing because US Investors were “more optimistic” about fossil fuels.

Biraj Borkhataria is an analyst with RBC Capital Markets. He said Shell had higher operating cashflows than Exxon for the first three months of this year, after accounting for working capital and spending budgets that were similar, but it still lags behind its US-based rival when it comes to market valuation. He said that the valuation gap continued to be extreme.

These comments rekindled concerns in the City about an exodus from London of its largest listed companies to rival markets. The City’s concerns were exacerbated when Flutter, owner of Paddy Power , voted this week to move the company’s primary listing from London to New York . This follows BHP’s uninvited takeover bid of Anglo-American.