Shell (SHEL) Stock: Strong Q125 Earnings and $3.5 Billion Buyback Boost Confidence

TLDR

Q1 adjusted earnings rose 52% to $5.6 billion $3.5 billion buyback marks 14th straight quarter of repurchases Cash flow from operations reached $11.9 billion Liquefaction outages in Australia weighed on production Net debt increased due to strategic lease additions and loans

Shell (NYSE: SHEL) shares closed at $66.64 on May 2, up 2.84%, after the energy giant reported strong first-quarter 2025 results on May 02, 2025. Adjusted earnings jumped 52% from the previous quarter to $5.6 billion, buoyed by robust upstream production and higher integrated gas output. The company also launched a fresh $3.5 billion share buyback program, reinforcing shareholder returns amid market speculation over a potential BP takeover bid. Shell is set to report its next earnings around July 31, 2025.

Shell (SHEL) 

Cash flow from operations reached $11.9 billion in Q1, excluding working capital changes. The company did face a $2.7 billion working capital outflow during the quarter. Operationally, Shell saw higher integrated gas production, although liquefaction volumes were lower due to unplanned outages in Australia. Upstream availability was solid, exceeding 98% in key regions like Norway, Nigeria offshore, and Kazakhstan.

CEO Wael Sawan emphasized the company’s preference for buybacks over large acquisitions, telling the Financial Times that purchasing Shell’s own shares remains “absolutely the right alternative” rather than bidding for BP. Shell has now executed buybacks of at least $3 billion for 14 consecutive quarters, contrasting with BP, which recently scaled back its buybacks to shore up its balance sheet.

Shell just launched a new $3.5 billion buyback alongside its Q1 results.

In Q1 2025 alone, it returned $5.5 billion to shareholders: $3.3B via buybacks and $2.2B in dividends. That marks 14 consecutive quarters of at least $3B in buybacks. Over 20% of shares have disappeared… https://t.co/1xyZwt4RYG pic.twitter.com/D6G5HdkcyP

— Karel Mercx (@KarelMercx) May 2, 2025

Strategically, Shell continued its portfolio reshaping. It completed the acquisition of Pavilion Energy while exiting assets in Singapore and Nigeria. Production also ramped up at key projects like the Penguins FPSO in the UK North Sea and Dover in the Gulf of Mexico, supporting its operational targets.

However, challenges persist. Liquefaction volumes in integrated gas were hampered by Australian outages, and Shell’s low-carbon businesses faced headwinds in a difficult macro environment. The chemicals division continued to struggle with low margins, though management expects some relief following its Singapore divestment.

Shell’s net debt position increased in Q1, driven by lease additions tied to the Pavilion deal and loan drawdowns related to Nigeria asset sales. While these moves were planned and strategic, the higher debt load could limit flexibility if market conditions worsen.

Looking ahead, Shell maintains a strong balance sheet and continues to prioritize capital returns while advancing its energy transition plans. But investors will monitor whether operational hiccups and debt increases become bigger risks in the second half of 2025.

 

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