May 07, 2026 [Reuters]- Shell’s first-quarter profit beat estimates and hit its highest in two years at $6.9 billion on Thursday, boosted by gains linked to the Middle East war, prompting it to raise the dividend by 5%.
At the same time, it cut its quarterly share buyback programme to $3 billion from $3.5 billion to preserve cash for its balance sheet as a short-term liquidity squeeze after war-related energy supply disruption increased its debt.
“It really reflects that confidence we have in the long-term cash flows of the company,” Shell’s Chief Financial Officer Sinead Gorman said on a call with reporters of the dividend hike, adding she still felt Shell shares were undervalued. She said she had reduced the buybacks to allocate cash to the balance sheet.
Shell had previously exceeded its shareholder distribution target of 40% to 50% of operational cash flow, and Citi analyst Alastair Syme said the 8% year-on-year cut in payouts from the dividend-buyback rebalancing should have come earlier.
Oil majors typically use buybacks as a flexible tool, while dividends are rarely cut. Shell cut its dividend for the first time since World War Two in 2020 during the COVID-19 pandemic.
Shell’s shares were down 2% in early trading, broadly in line with peers, as benchmark global oil prices retreated from peaks above $100 a barrel.
First-quarter adjusted earnings, Shell’s definition of net profit, rose to $6.92 billion, beating an analyst consensus of $6.36 billion and up from $5.58 billion a year earlier.
Profits at its chemicals and products unit, which includes refining and oil trading, were $1.93 billion, beating expectations of $1.24 billion and rising from $0.45 billion last year.
This mirrors strong oil trading at European peers BPand TotalEnergies, which have benefited from price volatility more than theirU.S. rivals.
Shell’s oil and gas output fell 4% from the previous quarter, mainly due to outages in Qatar after damage to part of itsPearl gas-to-liquidsplant in the conflict that began at the end of February. Repairs may take about a year.
For the second quarter, Shell expects integrated gas production to drop up to 36% due to the conflict’s impact, including in Qatar. LNG liquefaction volumes are expected to fall by up to 14%.
Shell’s gearing, or debt-to-equity ratio including leases, rose to 23.2% from 20.7% at the end of 2025, reflectinghigher debtlinked to price swings and supply disruptions.
Gorman said she was very happy with the balance sheet.
Cash flow from operating activities was $6.1 billion, hit by large swings in inventory values that pushed working capital – a liquidity measure of current assets minus liabilities – to minus $11.2 billion.
Shell expects working capital movements to reverse over time if oil and gas prices ease.
