Shell PLC (LSE:SHEL, NYSE:SHEL) announced a new $3 billion share buyback programme as it reported higher first quarter profits and maintained a steady outlook.
Analysts said underlying earnings came in ahead of forecasts, but that management had slowed the pace of share buybacks slightly.
The oil major's adjusted earnings more than doubled to $6.9 billion in the first three months of 2026, up from $3.3 billion in the previous quarter and $5.6 billion a year earlier. Strong trading and marketing were key, the company flagged in a recent trading update.
Free cash flow was $2.9 billion, lower than $4.2 billion in the fourth quarter, reflecting working capital outflows linked to commodity price movements.
The new buyback arrives after the FTSE 100's third-largest company completed a $3.5 billion programme from the previous quarter and shelled out $2.1 billion in dividends.
Looking ahead, capital expenditure for the full year is expected to be $24-26 billion, including around $4 billion linked to the planned acquisition of ARC Resources.
Second-quarter production guidance points to some pressure from maintenance and geopolitical disruption. Integrated gas output is expected at 580,000 to 640,000 barrels of oil equivalent per day, with LNG volumes impacted by the Middle East conflict.
Upstream production is forecast at 1.62-1.82 million barrels per day, also reflecting planned maintenance.
Refinery utilisation is expected to remain high at 91% to 99%, while chemicals plant utilisation is guided at 76% to 84%.
Shell shares fell 2.2% to 3,140p in early trading, but oil prices were also down on the day.
First quarter underlying earnings came in nearly $1bn ahead of forecasts, said analyst Derren Nathan at Hargreaves Lansdown, adding that the backdrop of massive disruption in energy markets provided grist to the mill for its trading and optimisation activities.
Improved refining margins, cost discipline and higher oil and gas prices all played their part too, he said.
"Free cash flow moved in the other direction, falling $1.3 billion from the previous quarter to $2.9 billion as the higher price environment locked up more cash in stock and sums receivable from customers."
The immediate outlook for integrated gas has been impacted by damage to Shell’s facilities in Qatar, Nathan added, while the proposed acquisition of Canadian shall producer ARC goes some way towards diversifying supply.
"But with net debt up 27% over the last year to $52.6bn, management has slowed the pace of share buybacks slightly," the analyst added.
Broker Panmure Liberum said the second-quarter outlook "should be very strong", despite lower volumes due to higher commodity prices and the lag on pricing of LNG cargoes, "suggesting that the spike in [spot liquid natural gas] prices at the start of the conflict will be recognised in 2Q26, with the trading business also set to do well amidst higher market volatility".
The broker felt the dividend and buyback were positives.
** UPDATE: Adds share price and broker comments **