ii view: what to consider before selling Shell

Fourth-quarter results to 31 December

• Income down 22% from Q3 to $4.1 billion
• Adjusted earnings down 40% from Q3 to $3.26 billion
• Share buyback of $3.5 billion for Q1
• Dividend by 4% from Q3 to $0.372 per share
• Total dividend for 2025 of $1.45 per share, up from 2024’s $1.39 per share
• Net debt up to $45.69 billion from $38.8 billion a year ago

ii round-up:

Energy giant Shell (LSE:SHEL) operates across several divisions including integrated gas, chemicals and products and renewables and energy solutions.

Alongside its upstream exploration and production business, its downstream operations serve around 33 million retail customers a day at 47,000 service stations. It also has around 73,000 electric vehicle (EV) charge points. 

In 2022, the company changed its name from Royal Dutch Shell to just Shell, moving its headquarters from the Netherlands to the UK. 

For a round-up of these latest results announced on 5 February, please click here. 

ii view:

Employing over 95,000 people across more than 70 countries, Shell serves approximately one million business customers per day. Focuses outlined in March 2025 include becoming the world’s leading integrated gas and Liquefied Natural Gas (LNG) business, as well as making Shell simpler, more resilient and more competitive. Group competitors include BP (LSE:BP.), TotalEnergies SE (EURONEXT:TTE), Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX).  

• Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA

For investors, operational challenges and potentially higher costs caused by war in the Middle East now need to be considered. US tariffs reducing demand for products such as cars, which require significant energy to produce, are not to be forgotten. A lower priority for renewables could come back to hurt Shell in future, while a forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap.

• Stockwatch: should investors back these four oil stocks?
• eyeQ: high-risk stock gives standout signal
• Gold, silver and defence: reasons to be bullish and bearish

On the upside, unpredictable geopolitics and an evolving war in the Middle East now raise concerns about oil & gas supply, driving prices higher. Management focus includes exploring only regions where hydrocarbons have already been found, helping limit capital expenditure and assist shareholder returns. Structural cost reductions now total $5.1 billion since 2022, while a diversity of operations regularly allows one area of strength to counter another of weakness.

For now, and despite risks, a global requirement for fossil fuels and forecast dividend yield of over 3.5% 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:

Cautious buy