ii view: Shell gushes past Q2 profit forecasts
Outperforming the FTSE 100 year-to-date and with an enviable record of shareholder returns. Buy, sell, or hold?
30th July 2026 11:52
by Keith Bowman from interactive investor
Second-quarter results to 30 June
- Adjusted profit up 42% from prior quarter to $9.84 billion (£7.4 billion)
- New share buyback of $3 billion
- Dividend of $0.3906 US cents, unchanged from Q1
- Net debt of $41.8 billion, down from $52.6 billion in Q1
ii round-up:
Oil and gas giant Shell (LSE:SHEL) today detailed profit that comfortably exceeded City forecasts.
Records for both upstream production in Brazil and refinery utilisation helped counter hindered Middle East output. A second-quarter adjusted profit of $9.84 billion (£7.4 billion) is up from $6.92 billion in the first quarter. Analysts had expected $8.68 billion.
Shares in the FTSE 100 giant rose 1% in UK trading having come into this latest news up by just over a fifth so far in 2026. The FTSE 100 index is up by close to a tenth year-to-date. BP (LSE:BP.), now run by a relatively new CEO, has risen by just over a quarter. Brent crude has soared by just over two-fifths in 2026.
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Shell's various divisions include integrated gas, chemicals and products and renewables and energy solutions.
Shareholder returns for the UK headquartered company saw a new $3 billion quarterly share buyback programme announced, as well as a dividend payment of $0.3906 declared. Both are unchanged from the first quarter.
As well as a newly announced $3 billion share buyback for the third quarter, $1.2 billion remains unused from the second-quarter giving a total of $4.2 billion still to be executed.
Shell previously reduced the quarterly buyback programme to $3 billion from $3.5 billion while unexpectedly increasing the dividend. The move potentially came given the rise in its share price and the war in the Middle East.
Group net debt of $41.8 billion is down from $52.6 billion in Q1. In late April, Shell announced the $16.4 billion of Canadian company ARC Resources, mainly using its own shares. ARC’s core asset is the Montney shale basin in British Columbia and Alberta. The deal is expected to close in the current third quarter.
Results for the three months to late September are scheduled for 29 October.
ii view:
Founded in 1907, Shell today employs around 85,000 people across more than 70 countries. Alongside upstream exploration and production, downstream operations serve around 29 million retail customers a day. Electric vehicle (EV) charge points total around 88,000. Rivals include ExxonMobil Holdings Corp (NYSE:XOM) and TotalEnergies SE (EURONEXT:TTE).
For investors, hindered production and higher costs caused by the war in the Middle East are not to be ignored. Higher inflation caused by the spike in energy prices may now cause interest rates to remain higher for longer, dampening economic activity and reducing energy demand. Concerns about climate change have not gone away, while further energy price volatility, still affected by the war in Ukraine, may accelerate government moves globally to diversify energy supplies and switch to alternatives like nuclear power.
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To the upside, ongoing conflict in the Middle East and related production and shipping supply challenges continue to support fossil fuel prices. Management’s strategic focus outlined in early 2025 included becoming the world’s leading integrated gas and LNG business, as well as making Shell simpler, more resilient and more competitive. Structural cost reductions total over $5 billion since 2022, while a diversity of operations regularly sees one area of strength countering another of weakness.
On balance, energy price volatility from pandemic lows to war related highs give room for caution. That said, the world’s addiction to oil and a forecast dividend yield of 3.5% continue to leave Shell justifying its place in many investor portfolios.
Positives:
- Diversity of operations
- Focus on shareholder returns
Negatives:
- Uncertain economic outlook
- The weather can raise operational challenges
The average rating of stock market analysts:
Strong hold
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