Shell Reported Third-Quarter Results That Were Just Beachy

Shell Reported Third-Quarter Results That Were Just Beachy
Paul Allison, CFA

4 months ago2 mins

What’s going on here?

Shell reported third-quarter results that lived up to expectations, so now the British oil goliath can enjoy a moment of zen.

What does this mean?

Shell’s results came hot on the heels of BP’s from earlier this week, with both hulking oil giants reporting third-quarter profit that was higher than the quarter before, but lower than the same time last year. No surprise: oil prices are cheaper than they were back then. But Shell must have done something right, because while BP’s profit was down 60%, Shell’s only slipped by about a third. That may or may not have something to do with the titans' long-term plans. BP is openly striving toward net-zero targets, but Shell’s keeping its cards close to its chest. Investors seem trusting: Shell’s shares are up 17% this year, way ahead of BP’s step up.

Shell profit

Why should I care?

For markets: Best friends forever – or at least, for now.

Big Oil’s keeping investors busy these days, not least because the energy transition is poised to shake up the industry’s long-term winners and losers. But for the moment, the fortunes of oil firms are closely tied to the oil price. Problem is, that future price tag is notoriously hard to predict.

Shell stock
Source: Google Finance

The bigger picture: Clear as mud.

You’d think oil’s price would be pushing toward all-time highs right now. War in Europe has been suppressing the amount of oil available, and now the threat of conflict escalating in the Middle East has investors speculating on even more supply problems. Plus, OPEC – the group of oil-producing nations – has been keeping a tight grip on barrels lately too. But in reality, the black gold’s price is roughly the same as it was before war broke out in Ukraine. That means one of two things: either that’s a gleaming buying opportunity, or a hidden factor is holding prices down.

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