Shell Q3 adjusted profit nearly doubles to $10.8 billion on record refining margins; shares rise about 3%

SHEL reported third-quarter adjusted (non-GAAP) earnings of $10.81 billion, almost double the $5.43 billion of a year earlier and above the $10.33 billion analysts expected on average, per Reuters. That was about 10% above the $9.8 billion of the second quarter. IFRS income attributable to shareholders was $12.06 billion. Bloomberg called it Shell's second-highest profit ever, and Reuters said it was the highest since 2022.

Refining did the heavy lifting. Shell's global indicative refining margin rose to $42 a barrel from $24 in the second quarter and $11.6 a year earlier, above the previous record of $28.04 set in the second quarter of 2022, per TipRanks. Chemicals and Products adjusted earnings reached $3.9 billion against $550 million a year ago, and Products margins added $1,065 million versus the second quarter. The Motley Fool noted that every other segment combined stayed about flat quarter on quarter.

Cash flow from operations excluding working capital was $21.7 billion against expectations of $18.18 billion, and free cash flow was $16.3 billion. Shell raised its buyback to $5 billion for the next three months from $3 billion, which Reuters called the second-largest on record. Net debt fell to $39.7 billion and gearing to 16.6%. TotalEnergies reported adjusted net income of $9.1 billion against an expected $8.3 billion, with a refining margin of $33.2 a barrel.

Shell shares gained 3.2% in early trade, against a 1.9% rise in European energy stocks, per one Reuters copy, while another put the early gain at 2.9%. TipRanks said the stock had risen 50% year to date.

Watch the payout and the coming charges: RBC expects Shell to miss its 40% to 50% payout ratio guidance for the year, oil and gas output fell 17% in the first nine months, and Shell expects a non-cash loss of about $6.4 billion in the fourth quarter from derecognising its Netherlands pension plan.