What happened at Shell
Shell is dialing up fourth quarter buybacks to $5 billion from $3 billion as profits jump on a wartime pinch in fuel supply. Refining margins hit an all-time high of $42 a barrel and earnings from the chemicals and products unit also set a record, lifting adjusted net income to $10.8 billion and beating analyst estimates, while ongoing disruption still pressured production in Qatar. The stock climbed up to 3.8% in London, topping gains across the sector.
Refining runs are set to stay elevated. Shell expects its refineries to operate at 92% to 100% of capacity in the final quarter, versus historically strong utilization of 102% in Q2 and 96% in Q3.
Why profits are running hot across Europe
A rare choke point in turning crude into diesel, gasoline and jet fuel is boosting margins. Ongoing wars that involve Iran and Russia have taken refineries and trade routes offline or thrown them into disarray, leaving the facilities still running with unusually strong earnings.
Europe's majors, which typically grow more slowly than US peers, are funneling this refining windfall to shareholders and shoring up balance sheets, at least for now.
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What peers are doing and the pacing
On Thursday, TotalEnergies reported sharply higher earnings and said its Q4 buybacks could reach up to $2.5 billion, adding that it intends to keep that pace through the first quarter of next year. Spain's Repsol is rolling out a plan totaling as much as 950 million euros, nearly double its prior commitments, and Italy's Eni announced an increased buyback last week.
Shell's latest plan is its biggest since Q2 2022. The only larger quarter came in 2021, when it announced a distribution of proceeds from a Permian Basin asset sale. That puts Shell alongside sector leader ExxonMobil Holdings Corp., with buybacks totaling $20 billion slated for this year.
Earnings from ExxonMobil, BP and Chevron are due on Friday. The bottom line: a tight refining system is translating into heavier buybacks and sturdier balance sheets, and that shows up in your portfolio.
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