• Adjusted Earnings: $5.6 billion, up 52% compared with Q4.
• Cash Flow from Operations: $11.9 billion, excluding working capital.
• Working Capital Outflow: $2.7 billion in Q1.
• Integrated Gas Production: Higher than Q4, despite lower liquefaction volumes due to unplanned outages in Australia.
• Upstream Availability: Above 98% in Norway, Nigeria offshore, and Kazakhstan.
• Share Buyback Program: $3.5 billion announced, expected to complete by Q2 results announcement.
• Net Debt Position: Increased due to lease additions from Pavilion and drawdown from Nigeria onshore divestment loan facilities.

• Warning! GuruFocus has detected 3 Warning Sign with FUBO.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Shell PLC (NYSE:SHEL) delivered solid financial results in Q1 2025, with adjusted earnings of $5.6 billion, up 52% compared to Q4.
• The company announced a $3.5 billion share buyback program, marking the 14th consecutive quarter of buybacks of $3 billion or more.
• Shell PLC (NYSE:SHEL) completed significant portfolio repositioning, including the acquisition of Pavilion Energy and divestments in Singapore and Nigeria.
• The company achieved key operational milestones, such as the start of production at the Penguins FPSO in the UK North Sea and Dover in the Gulf of America.
• Shell PLC (NYSE:SHEL) maintained a strong balance sheet, with a net debt position reflecting strategic lease additions and divestments.

Negative Points

• Liquefaction volumes in Integrated Gas were lower due to unplanned outages in Australia, impacting overall production.
• The low carbon option businesses faced challenges in a difficult macro environment, affecting their performance.
• Chemicals continued to experience low margins, although improvements are expected following the Singapore divestment.
• The macroeconomic environment remains uncertain, posing potential risks to future performance and strategic initiatives.
• Shell PLC (NYSE:SHEL) saw an increase in net debt due to lease additions and loan drawdowns, although these were planned and strategic.

Q & A Highlights

Q: Can you discuss Shell's approach to countercyclical capital allocation and the challenges in trading gas given market volatility? A: Wael Sawan, CEO, emphasized Shell's focus on unlocking intrinsic value and maintaining a lean structure to handle market cyclicality. He highlighted the company's commitment to free cash flow per share growth and prudent capital allocation, favoring buybacks due to the current advantageous share price. Sinead Gorman, CFO, noted that despite some operational challenges, LNG trading performed well due to strong demand and optimization, though future earnings might face pressure due to planned maintenance and lower prices.

Q: How flexible is Shell's CapEx budget in response to a deteriorating macro environment, and what impact will the Singapore disposal have on earnings? A: Sinead Gorman stated that Shell's CapEx budget remains at $20 billion to $22 billion, reflecting the company's strong positioning to manage uncertainty without cutting projects. The Singapore disposal, which was loss-making, is expected to improve earnings by several hundred million annually.

Q: What real-time demand trends is Shell observing, and how is the company progressing with operational cost reductions? A: Wael Sawan noted stable demand for oil products and LNG, with tight LNG markets due to low European storage levels. He highlighted Shell's focus on operational performance and cost reduction, emphasizing simplification and efficiency improvements across the organization.

Q: Is Shell's organizational culture ready to handle large acquisitions, and how would the company respond to prolonged low oil prices? A: Wael Sawan expressed confidence in Shell's evolving culture, citing successful integration of recent acquisitions like Pavilion. Sinead Gorman explained that at $50 oil, Shell would maintain buybacks and adjust CapEx, while at $40, the focus would be on sustaining dividends and potentially leveraging the balance sheet.

Q: How does Shell view the current market for disposals, and what is the status of LNG Canada? A: Wael Sawan highlighted the completion of major disposals like Nigeria onshore and Singapore, positioning Shell to focus on delivering free cash flow growth. Sinead Gorman confirmed LNG Canada's progress, with the first cargo expected mid-year, emphasizing the importance of ramp-up for significant earnings impact.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.