Shell said it would buy back $3.5 billion of shares after posting higher-than-expected adjusted earnings for the first quarter.

Shell shares jumped 3% in premarket.

The British energy giant's adjusted earnings--a closely watched metric that strips out certain commodity price adjustments and one-time charges--rose to $5.58 billion from $3.66 billion in the preceding quarter, beating the $4.96 billion analysts polled by Vara Research had expected. In the first quarter of 2024, Shell posted adjusted earnings of $7.73 billion.

Friday's results are the company's first since its capital markets day in March, when it said it would grow top-line production and increase shareholder returns over the next five years.

Global trade tensions and the prospect of oversupply have weighed on oil prices and left Brent crude hovering at around $60 dollars a barrel in recent days. Sustained weak prices will challenge European energy companies' commitment to return cash to shareholders and earlier this week British peer BP slashed its buyback to $750 million from $1.75 billion. France's TotalEnergies kept its $2 billion quarterly buyback unchanged but analysts raised the prospect of a cut later in the year.

Shell's buyback is in line with the $3.5 billion share repurchase it launched in January, marking 14th consecutive quarter of at least $3 billion in buybacks, it said.

The company's strong balance sheet and ability to generate sufficient free cash flow to cover shareholder distributions in a lower price environment mean its returns have been regarded as among the safest across the sector. Shell declared a dividend of 35.8 cents a share and said buybacks would continue even if oil was priced around $50 a barrel.

Shell's Chief Financial Officer Sinead Gorman reiterated Friday that the company would lean on its balance sheet. She added that she has no intention of reducing net debt, which ticked up to $41.5 billion over the quarter on lease additions related to the Pavilion Energy acquisition.

Shell said the on-quarter increase in earnings reflected lower exploration well write-offs, reduced operating expenses and higher product margins.

Adjusted earnings from its integrated gas division rose to $2.48 billion from $2.17 billion in the previous quarter, while its upstream division's earnings jumped to $2.34 billion from $1.68 billion.

Cash flow from operations excluding working capital was $11.9 billion, reflecting tax payments of $2.9 billion. Shell said a quarterly working capital outflow of $2.7 billion was in line with previous first quarters.

Gorman also said Shell was in no rush to complete the strategic review of its chemicals assets and that it remains committed to reducing capital employed in the portfolio by 2030. Shell also confirmed that it expects cash capital expenditure of between $20 billion and $22 billion for the full year.