Shell (Shell stock) shares increased on Thursday as the British energy company announced plans to increase its dividend payout and initiate a stock buyback program with a total value of $4 billion.
Although the oil and gas multinational corporation’s earnings for the third quarter came in lower than their record-setting performance in the second quarter, they still managed to exceed the expectations of market experts.
Shell Stock Price
In the third quarter, Shell (LON:SHEL) announced an adjusted profit of $9.45 billion, or $1.30 per share, which represents a 130% rise over the same time a year ago. Nevertheless, that was an 18% decrease from the record $11.5 billion profit that it announced during the second quarter of this year. Profit of $9.31 billion, or $1.18 per share, was what industry analysts anticipated seeing.
According to the corporation, the decline from the previous quarter was due to lower trading in liquefied natural gas, weaker profits in the chemical and refining industries, and greater costs.
Shell (LON:SHEL) also announced the beginning of a share buyback program with a total value of $4 billion, which the company intended to finish within the next three months. According to the latest statement from the business, the corporation plans to null and void all repurchased shares, which were previously traded on the London and Netherlands exchanges.
In addition to this, it disclosed plans to enhance the dividend per share by 15% for the fourth quarter, which is scheduled to be paid out to shareholders in March 2023, pending approval by the board.
Earlier in the month, Vice President Biden issued a stern warning to American energy corporations, advising them not to reinvest their gains in the form of stock buybacks or dividends. According to him, oil corporations had to place a greater emphasis on expanding supply in order to bring down prices.
Shell, being a British firm, wasn’t specifically singled out by Biden’s warning; nonetheless, the corporation’s dividend increase and stock repurchase program run the risk of increasing political pressure at home in the midst of proposals for a windfall tax on excessive earnings.
A similar increase of over 4% was seen in the value of American depositary receipts (ADRs). Shares of Shell’s competitor BP (BP. U.K.), which will announce profits on Tuesday, also received a boost and rose by 2% as a result.
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