Shell Plc ( SHEL ) stock fell on Thursday after the company reported mixed first-quarter fiscal 2026 results. Stronger earnings and a higher dividend were offset by weaker-than-expected revenue, rising debt, and a reduced share buyback program.

Details

Adjusted earnings per American Depositary Share came in at $2.44, ahead of the consensus estimate of $2.13.

However, revenue fell short at $69.69 billion, compared with analysts' forecast of $80.95 billion.

Adjusted earnings rose significantly to $6.9 billion, from $3.26 billion in the last quarter on strong performance across the business. As per Reuters, the company achieved its highest adjusted earnings in two years.

Shell generated $6.1 billion in cash flow from operations during the quarter.

At the end of the quarter, net debt stood at $52.6 billion, up from $45.7 billion in the fourth quarter.

Shell Segment Performance

Integrated Gas production fell 4% quarter over quarter to 909,000 barrels of oil equivalent per day. LNG liquefaction volumes edged up 1% sequentially to 7.86 million metric tons. Production was impacted by the Middle East conflict on Qatari volumes.

Realized liquids prices further rose to $77 per barrel from $55 per barrel in the last quarter. Gas prices declined to $6.5 from $6.8 per thousand standard cubic feet.

Marketing sales volumes declined sequentially to 1.92 million barrels per day from 1.96 million barrels per day. Lubricants rose to 95,000 b/d (from 83,000 b/d). Sectors & Decarbonisation fell to 617,000 b/d (from 658,000 b/d in the prior quarter).

Share Buyback & Dividend

Total shareholder distributions stood at $5.3 billion, including $3.2 billion of repurchases and $2.1 billion in cash dividends in the quarter.

Shell has completed its previously announced $3.5 billion share buyback program. The company announced a new $3.0 billion buyback program, which it expects to finish by the time of its second quarter of 2026 results.

As per Reuters, the company has slowed share buybacks to conserve cash and support its balance sheet amid a short-term liquidity squeeze and higher debt following war-related energy supply disruptions.

The company increased its dividend by 5% to 39.06 cents per share, payable on June 29 to shareholders of record as of May 22, 2026.

ARC Resources Acquisition

Last month, Shell agreed to acquire ARC Resources Ltd., a Montney-focused producer in British Columbia and Alberta, in a cash-and-stock transaction.

The deal carries an equity value of about $13.6 billion and an enterprise value of roughly $16.4 billion, including $2.8 billion in net debt and leases.

The acquisition adds about 370,000 barrels of oil equivalent per day and is expected to lift Shell's production growth rate to 4% through 2030, compared with 2025 levels. It also expands Shell's position in Canada's Montney basin, combining ARC's more than 1.5 million net acres with Shell's roughly 440,000 acres.

Shell Q2 Outlook

The company expects Integrated Gas production of 580-640 thousand boe/d and LNG liquefaction volumes of 6.8-7.4 million tons in the second quarter of 2026.

Upstream volumes are projected at 1.62-1.82 million boe/d, while Marketing volumes should range from 2.50-2.70 million b/d.

Refinery utilization is forecast between 91%-99%, and Chemicals plant utilization is expected to fall between 76%-84% in the quarter.

The guidance reflects the expected impact of the Middle East conflict.

For fiscal 2026, capital expenditures stood at $24 billion to $26 billion, including around $4 billion related to the acquisition of ARC Resources.

SHEL Price Action: Shell shares were down 3.11% at $84.49 at the time of publication on Thursday, according to Benzinga Pro data.