By Shadia Nasralla and Stephanie Kelly
LONDON, Oct 29 (Reuters) - Shell on Thursday reported its highest quarterly profit since 2022 and raised share buybacks after war-driven energy prices and record refining margins helped it beat expectations.
The oil major posted third-quarter net profit of $10.81 billion, above analysts' average estimate of $10.33 billion and almost double the $5.43 billion earned a year earlier.
The US-Israeli war with Iran, now in its ninth month, has disrupted global energy
supplies and helped push Shell's refining margin to a record $42 a barrel, compared with $11.6 a year ago and $24 in the previous quarter.
Shell raised its quarterly buyback to $5 billion from $3 billion. The buyback is Shell's second largest on record, behind the $6 billion programme launched in the second quarter of 2022.
The company's shares rose 2.9% in early trade, outpacing a 0.7% gain in a broader index of European energy companies.
Shell's integrated gas business earned $3.04 billion, above expectations of $2.93 billion, while upstream earnings of $3.19 billion also topped forecasts of $3.10 billion. Cash flow from operations, excluding working capital, rose to $21.7 billion from $12.24 billion a year earlier and exceeded expectations of $18.18 billion.
EFFECTS OF THE WAR
Oil and gas output fell 17% in the first nine months of 2026 from a year earlier, mainly because the Middle East conflict reduced volumes from Qatar. LNG liquefaction volumes rose 12%, driven by the ramp-up of LNG Canada and partly offset by the disruption in Qatar.
Production at Shell's Pearl gas-to-liquids plant in Qatar was halted in March after an attack on Ras Laffan Industrial City damaged one of its two trains. Shell has partially restarted the plant but has said repairs could take about a year.
Shell recorded $5.4 billion in non-cash increases in the variable component of shipping leases, driven by the current economic environment. Trading in the chemicals and products segment, which includes Shell's large oil trading operation, was lower than a very strong second quarter, reflecting non-cash timing effects.
Shell booked $2.5 billion in pretax impairments, mainly related to a European biogas asset after management lowered its expectations for market development. These were partly offset by $1.8 billion in pretax impairment reversals on a North American asset in its integrated gas segment, following changes to commercial terms and the final investment decision on LNG Canada Phase 2.
Since December 30, 2022, Shell has delivered a 120% total shareholder return including reinvested dividends, ahead of BP's 78%, TotalEnergies' 84%, ExxonMobil's 89% and Chevron's 51%, according to Shell data.
Investors have been watching how oil majors deploy windfall profits from the conflict and whether they can resist ramping up spending. The sector has pledged to maintain capital discipline during one of the most profitable periods for global oil producers in recent memory.
(Reporting by Shadia Nasralla and Stephanie Kelly. Editing by Jan Harvey and Mark Potter)
