Shell Q1 Earnings Impress But Revenues and LNG Sales Decline

Europe’s largest oil company, Shell plc SHEL, reported first-quarter 2025 earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $1.84, which came in well above the Zacks Consensus Estimate of $1.54 on the back of higher natural gas realizations.

However, the bottom line fell from the year-ago adjusted profit of $2.38 due to lower LNG sales.

Shell’s revenues of $70.2 billion were down from $74.7 billion in first-quarter 2024 and missed the consensus mark by 12.2%.

Meanwhile, Shell repurchased $3.3 billion of shares in the first quarter. The London-based company expects another $3.5 billion worth of repurchases for the second quarter. 

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Shell PLC Unsponsored ADR Price, Consensus and EPS Surprise

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Inside Shell’s Segments

Upstream: The segment recorded a profit of $2.3 billion (excluding items) during the quarter, up from $1.9 billion (adjusted) in the year-ago period. This primarily reflects the impact of higher natural gas prices.

At $71.49 per barrel, the group’s worldwide realized liquids prices were 6.6% below the year-earlier levels but natural gas prices rose 21.3%.

Shell’s upstream volumes averaged 1,855 thousand oil-equivalent barrels per day (MBOE/d), down a marginal 0.9% from the year-ago period, mainly due to new crude production. Liquids production totaled 1,335 thousand barrels per day (an increase of 0.3% year over year) and natural gas output came in at 3,020 million standard cubic feet per day (down 3.7%).

Chemicals and Products: In this segment, the London-based supermajor reported an adjusted profit of $449 million, down 72% from $1.6 billion earned in the year-ago period. The unfavorable comparison was due to unfavorable tax movements. Meanwhile, refinery utilization came in at 85%.

Integrated Gas: The unit reported an adjusted income of $2.5 billion, deteriorating from $3.7 billion in the January-March quarter of 2024. Results were primarily impacted by lower LNG sales volumes, which fell 2.3% from the first quarter of 2024 to 16.49 million tons. Total Integrated Gas production was also down 6.6% year over year to 927 MBOE/d.

Marketing: The segment recorded an income of $900 million (excluding items) during the quarter compared to the year-ago earnings of $781 million, due to lower operating expenses and higher margins. 

Renewables and Energy Solutions: The segment incurred an adjusted loss of $42 million, reflecting a deterioration from the year-ago income of $163 million. The performance blip primarily reflects asset disposals. External power sales were essentially flat year over year at 76 terawatt hours, though piped gas sales fell more than 3% to 184 terawatt hours.

Financial Performance

As of March 31, 2025, the Zacks Rank #3 (Hold) company had $35.6 billion in cash and $76.5 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 18.7%, up from 17.7% a year ago. 

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During the quarter under review, Shell generated cash flow from operations of $9.3 billion, returned $2.2 billion to its shareholders through dividends, and spent $3.7 billion on capital projects.

The company’s cash flow from operations decreased 29.5% from the year-earlier level. Meanwhile, the group raked in $5.3 billion in free cash flow during the first quarter compared to $9.8 billion a year ago.

Guidance

Shell expects second-quarter 2025 upstream volumes of 1,560-1,760 MBOE/d, while Integrated Gas production is expected between 890 MBOE/d and 950 MBOE/d. The company also foresees marketing sales volumes of 2,600-3,100 thousand barrels per day and refinery utilization in the range of 87-95%.

Important Energy Earnings So Far

While we have discussed Shell’s first-quarter results in detail, let’s take a look at some other energy supermajor's reports of this season.

American multinational ExxonMobil XOM reported first-quarter 2025 earnings per share of $1.76 (excluding identified items), which beat the Zacks Consensus Estimate of $1.72. The bottom line, however, declined from the year-ago level of $2.06. ExxonMobil’s total quarterly revenues of $83.13 billion missed the Zacks Consensus Estimate of $84.49 billion. The top line increased from the year-ago figure of $83.08 billion.

Better-than-expected quarterly earnings were fueled by higher production from ExxonMobil’s Guyana and Permian operations, as well as structural cost savings. However, this was partially offset by lower base volumes from divestments, a decline in industry refining margins and weaker crude price realization.

Smaller rival Chevron CVX reported adjusted first-quarter earnings per share of $2.18, beating the Zacks Consensus Estimate of $2.15. The outperformance stemmed from higher-than-expected U.S. natural gas production in Chevron’s key upstream segment. The unit’s domestic output of 2,859 million cubic feet per day (MMcf/d) came in above the consensus mark of 2,666 MMcf/d. A healthy gain in the commodity’s U.S. realizations also played its part.  

The company recorded $5.2 billion in cash flow from operations compared to $6.8 billion in the year-ago period due to a drop in earnings and tax payments associated with divestment in Canada. Chevron’s free cash flow for the quarter was $1.3 billion.

London-based BP plc BP reported first-quarter 2025 adjusted earnings of 53 cents per American Depositary Share on a replacement-cost basis, excluding non-operating items. The figure lagged the Zacks Consensus Estimate of 56 cents. BP’s bottom line also declined from the year-ago reported figure of 97 cents.

Total quarterly revenues of $47.9 billion lagged the Zacks Consensus Estimate of $57.2 billion and declined from $49.9 billion reported a year ago. The weak quarterly results can primarily be blamed on lower liquid price realizations and weaker refining margins. Lower contributions from BP's customers and products business also affected the results.

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