Shell will hand over nearly £20bn to investors this year in a share buyback and dividend payout, despite a third-quarter profit slump.
The gas and oil giant said yesterday it would buy back an additional £2.9bn of shares over the next three months and pay a third quarter dividend of 27p.
This brings the total planned payouts for this year so far to a total of £19 billion.
The record payday for shareholders sparked a backlash from unions, which accused the company of profiting from consumers’ high energy bills.
Shell reported a profit of 5.1 billion pounds in the three months to the end of September, down 34 percent from 7.8 billion pounds in the same period last year, as oil and gas prices fell due to Russia’s invasion of Ukraine skyrocketed.
Wael Sawan: The new Shell boss has slowed down the transition to green energy
However, the latest figure was an increase on the previous quarter’s £4.2 billion.
And it was better than the 60 percent plunge in quarterly profit to £2.7 billion that arch-rival BP reported this week.
“Shell continues to widen the gap between itself and its British rival BP,” said Michael Hewson, chief market analyst at CMC Markets.
Shell CEO Wael Sawan has slowed the transition to green energy since taking the helm earlier this year, prioritizing profits and shareholder returns.
Yesterday’s figures showed the strategy was paying off as the oil and gas division made a profit of £3.85bn while the renewables division posted a loss of £54.8m.
Sawan said: “Shell delivered another quarter of strong operational and financial performance, capitalizing on opportunities in volatile commodity markets.”
“We continue to simplify our portfolio while providing more value with fewer emissions.”
Sawan has focused on boosting Shell’s share price because he believes the company is undervalued compared to U.S. rivals such as Exxon Mobil and Chevron.
Russ Mold, investment director at AJ Bell, said: “Wael Sawan is certainly confident enough to deliver generous returns to shareholders with another major share buyback.”
“Investors in oil and gas stocks on this side of the Atlantic felt left out in the cold compared to owners of major U.S. oil companies who ignored calls for a green strategy and were rewarded by the market.
“This has characterized the change under Sawan since he took office.”
“Investments continue to be made in the energy transition, but the return must increase.”
Shell said it will reduce capital spending to fund further payouts to shareholders.
Jamie Maddock, energy research analyst at Quilter Cheviot, said: “Looking ahead, Shell appears to be keeping a tight rein on project spending despite fluctuating oil prices.”
“This conservative spending means more cash that could be used to increase dividends and fund further share buybacks.”
The payout sparked outrage from unions, who said Shell and its investors were making money “at the expense of struggling families.”
TUC general secretary Paul Nowak said: “This sums up everything that is wrong with our broken energy market. “Money that should have gone into cutting household bills has ended up in shareholders’ pockets.”