Three of Europe's largest oil companies boosted shareholder payouts on Thursday, as the turbulence caused by the Iran war drove profits towards levels last seen in 2022. Shell announced a sharp increase in its quarterly share buyback programme from $3bn to $5bn, while France's Total Energies and Spain's Repsol also pledged higher dividends and buybacks after a surge in earnings. Analysts expect the companies to use the windfall to bolster oil and gas reserves and fund sector mergers and acquisitions.
Earlier this month, Italian major Eni also raised its payouts. Collectively, the oil industry is making its highest profits this year since Russia's full-scale invasion of Ukraine triggered an energy crisis in Europe in 2022. Shell said on Thursday it had made adjusted earnings of $10.8bn in the third quarter, its second highest on record, after posting a profit of $9.8bn in the previous three months.
The result beat analyst predictions of $10.3bn. "Our strong delivery allows us to announce a $5bn share buyback programme for the next three months," said Wael Sawan, chief executive, as he praised the company's "very strong results" at a time of "severe disruption to the global energy system". Biraj Borkhataria, an analyst at RBC Capital Markets, noted that Shell is now buying back shares at the same rate as Exxon Mobil, despite being half the US company's size in terms of market capitalisation. Shell's decision to boost its buybacks came just two quarters after the company trimmed its payouts as it sought to protect its balance sheet during the uncertainty of the Iran war.
Total Energies raised its dividend by 6 per cent year on year and raised buybacks from $1.5bn to $2.5bn for each of the next two quarters. Repsol nearly doubled its buybacks to €950mn and raised its dividend by 8 per cent compared with last year. Adjusted profits at Total more than doubled to $9.1bn from a year ago, beating forecasts.
Repsol, which operates six refineries, said its adjusted net income rose 260 per cent year on year in the third quarter to €2.7bn. Shell said third-quarter profits from refined fuels rose to $3.8bn as the world ran short of diesel and prices spiralled. Its refining margin -- the amount it makes on transforming a barrel of crude oil into fuel -- rose from $24 in the second quarter to a record high of $42.
Source: Financial Times Companies · Summarized by HeadlinesBriefing