Shell plc (LSE:SHEL) reported adjusted earnings of $10.8 billion for the third quarter of 2026, supported by strong operational performance, higher natural gas prices and record refining margins despite continued disruption to global energy markets.
The energy group generated $21.0 billion in cash flow from operations during the quarter, while free cash flow reached $16.3 billion.
Adjusted earnings increased approximately 10% from $9.8 billion in the second quarter, with improved profitability in refining and integrated gas operations offsetting weaker performance in upstream production and marketing.
Shell also announced a new $5 billion share buyback programme covering the next three months, alongside continued investment in its liquefied natural gas business.
The company completed its acquisition of ARC Resources Ltd. and reached a final investment decision on LNG Canada Phase 2, reinforcing its focus on long-term natural gas production and cash flow generation.
Third-Quarter Adjusted Earnings Increase to $10.8 Billion
Shell reported adjusted earnings of $10.81 billion for the three months ended September 2026, compared with $9.84 billion in the preceding quarter.
Adjusted EBITDA increased to $22.74 billion from $20.71 billion.
Income attributable to shareholders reached $12.1 billion, reflecting the group’s statutory financial performance during the period.
Cash flow from operating activities totalled $21.04 billion, compared with $21.43 billion in the second quarter.
Cash flow from operations excluding working capital movements reached $21.7 billion.
The quarterly result included tax payments of $3.2 billion and a $2.4 billion cash outflow associated with the timing of German emissions certificate payments.
These were partly offset by a $3.4 billion inflow from derivatives.
Shell recorded a working capital outflow of $600 million, reflecting a reduction in joint venture deposits.
Free cash flow reached $16.3 billion, compared with $17.5 billion in the second quarter and $10.0 billion in the third quarter of 2025.
Shell Announces $5 Billion Share Buyback Programme
Shell announced plans to repurchase $5 billion of its shares over the next three months.
The programme follows another quarter of substantial cash generation and reflects the group’s continued focus on shareholder distributions.
The company reported net debt of $39.7 billion at the end of September, down from $41.8 billion at the end of June.
Net debt included approximately $8 billion of non-cash liabilities associated with variable components of long-term shipping leases under current market conditions.
Excluding leases, net debt stood at $5.6 billion.
Shell’s gearing ratio was 16.6% following the completion of the ARC Resources acquisition, or 2.7% excluding leases.
Capital expenditure on a cash basis reached $7.92 billion during the quarter, compared with $4.24 billion in the second quarter.
The increase occurred alongside the company’s acquisition and investment activities.
Shell maintained its full-year 2026 cash capital expenditure outlook of between $23 billion and $25 billion, including the ARC Resources transaction.
Integrated Gas Earnings Rise to $3.0 Billion
Shell’s Integrated Gas division reported adjusted earnings of $3.04 billion in the third quarter, supported by higher realised gas and liquefied natural gas prices.
Adjusted EBITDA reached $5.18 billion, while cash flow from operations totalled $4.61 billion.
Natural gas production increased to 772,000 barrels of oil equivalent per day, compared with 631,000 barrels per day in the second quarter.
The average realised gas price rose to $8.30 per thousand standard cubic feet from $7.20 in the preceding quarter.
Realised liquids prices declined to $69 per barrel from $80 per barrel.
LNG liquefaction volumes reached 7.4 million tonnes, compared with 7.7 million tonnes in the second quarter.
However, LNG sales volumes increased to 19.3 million tonnes from 18.0 million tonnes.
Shell said trading and optimisation performance remained broadly consistent with the previous quarter.
The company expects Integrated Gas production of between 1.08 million and 1.18 million barrels of oil equivalent per day in the fourth quarter.
The forecast incorporates the contribution from ARC Resources following completion of the acquisition on 2 September 2026.
LNG liquefaction volumes are expected to range between 7.3 million and 7.9 million tonnes.
LNG Canada Phase 2 Investment Supports Long-Term Gas Strategy
Shell continued expanding its Integrated Gas portfolio through the completion of the ARC Resources acquisition and the final investment decision on LNG Canada Phase 2.
The company identified both developments as important investments in its long-term natural gas business.
The ARC Resources transaction adds production capacity to Shell’s portfolio, with the contribution reflected in its fourth-quarter production guidance.
Meanwhile, the LNG Canada Phase 2 investment decision advances the company’s liquefied natural gas expansion strategy.
Shell said the investments are intended to support longer-term cash flow growth.
The group also continued reshaping its wider portfolio through acquisitions, divestments and changes to its power business.
These activities included a US Mobility acquisition, the sale of non-core oil and gas assets in the United States and Cyprus, and further optimisation of its power portfolio.
Upstream Adjusted Earnings Reach $3.2 Billion
Shell’s Upstream business reported adjusted earnings of $3.19 billion during the third quarter.
Adjusted EBITDA reached $9.27 billion, while cash flow from operations totalled $7.28 billion.
Total production averaged 1.80 million barrels of oil equivalent per day, compared with 1.82 million barrels per day in the preceding quarter.
Liquids production declined slightly to 1.36 million barrels per day from 1.37 million barrels per day.
Natural gas production decreased to 2,562 million standard cubic feet per day from 2,648 million standard cubic feet per day.
The average realised liquids price fell to $84 per barrel from $89 per barrel.
However, realised natural gas prices increased to $10.00 per thousand standard cubic feet from $8.30.
Shell said adjusted earnings were lower than in the second quarter because of weaker liquids prices and higher well write-offs.
For the fourth quarter, the company expects Upstream production of between 1.7 million and 1.9 million barrels of oil equivalent per day.
The forecast includes an allowance for potential weather-related disruptions in the Gulf of America.
Refining Business Benefits From Record Margins
Shell’s Chemicals & Products division delivered adjusted earnings of $3.86 billion in the third quarter, supported by substantially higher refining margins and strong operational performance.
Adjusted EBITDA reached $6.20 billion, while cash flow from operations totalled $8.53 billion.
The group’s global indicative refining margin increased to $42 per barrel, compared with $24 per barrel in the second quarter.
Shell said the improvement reflected exceptionally strong refining market conditions.
The Products subsegment contributed approximately $3.8 billion in adjusted earnings, while Chemicals generated around $100 million.
Refinery processing intake declined to 1.21 million barrels per day from 1.27 million barrels per day.
Refinery utilisation reached 96%, compared with 102% in the preceding quarter.
The company reported strong operational performance despite challenges associated with low water levels in the Rhine river.
Chemicals sales volumes increased to 2.37 million tonnes from 2.28 million tonnes.
Chemicals manufacturing plant utilisation improved to 84% from 83%.
However, the global indicative chemicals margin declined to $208 per tonne from $270 per tonne.
Trading and optimisation earnings were lower than in the particularly strong second quarter, partly reflecting non-cash timing effects.
Shell expects fourth-quarter refinery utilisation of between 92% and 100%, with chemicals manufacturing plant utilisation forecast at 78% to 86%.
Marketing Earnings Decline Amid Weaker Margins
Shell’s Marketing division reported adjusted earnings of $1.16 billion during the third quarter.
Adjusted EBITDA reached $1.99 billion.
Marketing sales volumes increased slightly to 2.58 million barrels per day from 2.57 million barrels per day in the preceding quarter.
Mobility sales volumes rose to 1.89 million barrels per day from 1.87 million barrels per day.
However, lubricants volumes declined to 66,000 barrels per day from 75,000 barrels per day.
Sales volumes in Sectors & Decarbonisation remained unchanged at approximately 627,000 barrels per day.
Shell attributed the decline in adjusted earnings compared with the second quarter to weaker Mobility unit margins and lower lubricants volumes.
Cash flow from operations in the Marketing division was negative $210 million during the quarter.
The company expects fourth-quarter Marketing sales volumes of between 2.4 million and 2.6 million barrels per day.
Renewables and Energy Solutions Earnings Improve
Shell’s Renewables & Energy Solutions division generated adjusted earnings of $289 million in the third quarter.
Adjusted EBITDA reached $373 million, while cash flow from operations totalled $1.56 billion.
The division benefited from stronger trading and optimisation performance in Europe and the Americas.
External power sales increased to 74 terawatt-hours from 70 terawatt-hours in the second quarter.
Sales of pipeline natural gas to end-use customers declined slightly to 158 terawatt-hours from 161 terawatt-hours.
Renewable power generation capacity remained unchanged at 6.2 gigawatts.
Of this total, 4.6 gigawatts was operational, compared with 4.5 gigawatts in the previous quarter.
A further 1.6 gigawatts was under construction or committed for sale.
Shell continued reviewing and optimising its power portfolio as part of its broader capital allocation strategy.
Shell Flags Potential $6.4 Billion Non-Cash Pension Charge
Shell said its fourth-quarter 2026 reported income is expected to include a significant non-cash accounting charge associated with the derecognition of its Netherlands defined benefit pension plan.
As at 30 September, the estimated loss was approximately $6.4 billion.
The company cautioned that the amount remains subject to change during the fourth quarter.
The expected charge is an identified accounting item and should be distinguished from the group’s underlying operating performance.
Separately, Shell’s Corporate segment reported an adjusted earnings loss of $705 million in the third quarter.
The company expects a Corporate adjusted earnings loss of between $600 million and $800 million in the fourth quarter.
Chief Executive Highlights Operational Performance and LNG Investment
Shell Chief Executive Officer Wael Sawan said the company’s results reflected operational resilience despite significant disruption across global energy markets.
“Shell’s relentless focus on operational performance enabled very strong results in a quarter with continued severe disruption to the global energy system. I’m grateful to Shell’s teams around the world who continue to work tirelessly to produce and supply the energy our customers need.
“We are further investing in our advantaged Integrated Gas business with the completion of the ARC Resources Ltd. acquisition and the final investment decision on LNG Canada Phase 2, supporting Shell’s long-term cash flow growth.
“Our strong delivery allows us to announce a $5 billion share buyback programme for the next three months.”
The comments highlight management’s focus on maintaining cash generation, expanding its LNG portfolio and returning capital to shareholders.
Shell Outlook
Shell enters the final quarter of 2026 with full-year cash capital expenditure guidance of between $23 billion and $25 billion, including the ARC Resources acquisition.
The company expects Integrated Gas production of between 1.08 million and 1.18 million barrels of oil equivalent per day, with LNG liquefaction volumes ranging from 7.3 million to 7.9 million tonnes.
Upstream production is forecast at between 1.7 million and 1.9 million barrels of oil equivalent per day.
Marketing sales volumes are expected to range from 2.4 million to 2.6 million barrels per day.
The group also anticipates refinery utilisation of between 92% and 100% and chemicals manufacturing plant utilisation of between 78% and 86%.
Shell’s financial performance will continue to be influenced by commodity prices, refining margins, operational availability and geopolitical developments affecting energy supply.
The company plans to continue investing in its Integrated Gas business while maintaining capital expenditure discipline and shareholder distributions.
Its newly announced $5 billion share buyback programme is scheduled to run over the next three months.
Shell’s next Capital Markets Update and fourth-quarter 2026 results are scheduled for 4 February 2027.
Leave a Reply