British oil giant Shell reported a significant drop in annual profit on Thursday, attributing it to higher exploration write-offs, lower trading margins, and weaker crude prices in the final three months of the year. The company’s adjusted earnings for the full-year 2024 were $23.72 billion, down from $28.25 billion the previous year.
Analysts had anticipated Shell’s net profit for 2024 to be around $24.71 billion, according to an LSEG-compiled consensus. Another forecast from analysts polled by Vara Research predicted a full-year profit of $24.11 billion. In the final quarter of 2024, Shell posted adjusted earnings of $3.66 billion, which was lower than expected.
Shell announced a 4% increase in dividend per share and initiated a $3.5 billion share buyback program, expected to be completed within the next three months. CEO Wael Sawan described 2024 as a “very strong year” during an interview with CNBC’s “Squawk Box Europe,” emphasizing the company’s achievements.
Regarding a potential move of Shell’s listing from London to New York to align with its U.S. peers, Sawan mentioned that the company is always reviewing such matters but currently has no active discussions on the topic. The priority remains unlocking the company’s full potential.
Shares of the London-listed company closed nearly 3% higher on Thursday. The oil and gas industry has experienced a decline in profits since 2022 due to various factors, including fluctuating oil prices and global demand. Shell’s results reflect the ongoing efforts to enhance profitability and address market challenges.
As part of its strategic shift, Shell has focused on strengthening its core oil and gas operations while adjusting investments in renewable energy sectors. The company aims to achieve net-zero emissions by 2050 despite recent adjustments to climate targets and green investments.
Analysts have noted that Shell’s results met softened expectations but demonstrated strong cash generation. The company’s cash flow performance exceeded consensus estimates, despite lower earnings attributed to seasonal factors, pricing, and margins.
Looking ahead, U.S. oil giants Exxon Mobil and Chevron are scheduled to report earnings soon, followed by European peers TotalEnergies and BP. The industry continues to face regulatory and environmental challenges, as seen in a recent court ruling affecting Shell’s North Sea projects.
A Scottish court decision overturned approvals for two significant North Sea oil and gas fields, emphasizing the need to consider carbon emissions. Environmental groups hailed the ruling as a victory, prompting Shell and Equinor to seek new consents while emphasizing the importance of swift government action to address the situation.
