(Bloomberg) -- Shell Plc kept up the pace of share buybacks as first-quarter profit dropped less than expected, maintaining the focus on shareholder returns that has become a hallmark of the oil majors. 

The London-based energy producer said it would repurchase $3.5 billion of shares in the second quarter, matching the amount in the preceding two reporting periods. Shell has made dividends and buybacks a priority as it seeks to close the valuation gap with its US peers, and Chief Financial Officer Sinead Gorman said they will continue.

“We believe strongly that the share price at the moment does not represent the full value of this company,” Gorman said on a call with reporters. The buybacks will carry on until “we believe the value of Shell is represented through the share price.”

Shares of the company rose 1.3% to 2,854.5 pence as of 8:02 a.m. in London. 

 

 

Adjusted net income for the first quarter was $7.73 billion, down from $9.65 billion a year earlier, according to the statement. That beat the average analyst estimate of $6.25 billion, according to data compiled by Bloomberg. 

“Another strong quarter for Shell, with its crown jewel in the integrated gas segment reporting results well ahead of market expectations,” RBC analyst Biraj Borkhataria said in a note. “The key driver of the beat was another strong result from Shell’s integrated gas segment as well as oil products, both supported by stronger trading.” 

Results were buoyed by higher contributions from Shell’s oil and chemicals trading units, according to the statement. Gas trading earnings were strong, albeit lower than the “exceptional” performance seen in the fourth quarter.

The company kept a lid on spending, with $4.49 billion of cash capital expenditure in the first quarter, according to the statement. That’s about $2 billion less than a year earlier and down from $7.11 billion in the prior period. For the whole of 2024 that figure is expected to be between $22 billion and $25 billion. 

“With capex guidance and buybacks unchanged, it seems the company continues to try and show investors predictability, which is important,” said RBC’s Borkhataria. 

Sawan has pledged to be very selective with investments, focusing on high-return businesses. On Wednesday the company announced that it had exited its power business in China, following similar moves in the UK and Germany household retail space. 

Strong cash flow and lower capital spending allowed Shell to chip away further at its debt pile. Net debt dropped by $3 billion in the quarter to $40.51 billion. Gearing, a measure of debt relative to the company’s equity, stood at 17.7%, down more than a percentage point.

--With assistance from Will Kennedy.

(Updates with analyst comment in third paragraph.)

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