Shell Reports Weakest Quarterly Profit in Nearly Five Years Amid Falling Oil Prices

On February 5, 2026, Shell plc (SHEL) reported its fourth-quarter earnings, revealing adjusted earnings of $3.3 billion, marking an 11% decline from the previous quarter and the lowest quarterly profit since early 2021. This figure fell short of analyst expectations, which had anticipated earnings of approximately $3.5 billion. The company attributed the decline to a combination of weaker crude oil prices, unfavorable tax adjustments, and losses in its chemicals division, which reported a significant downturn due to poor trading conditions.

Shell Maintains Buybacks Despite Weakest Earnings in Years

Despite the disappointing earnings, Shell maintained its commitment to shareholder returns. The company announced a 4% increase in its quarterly dividend to $0.372 per share and initiated a new $3.5 billion share buyback program, marking the 17th consecutive quarter of buybacks exceeding $3 billion. Over the past year, shareholder payouts accounted for 52% of operating cash flow, surpassing Shell's target range of 40% to 50%.

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Shell's net debt rose to $45.7 billion by year-end, reflecting a gearing ratio of 20.7%, up from 18.8% in the previous quarter. This increase in debt has raised concerns among analysts regarding the sustainability of Shell's capital return strategy amid declining oil prices, which averaged around $63 per barrel during the quarter, down from $74 a year earlier.

Shell keeps $3.5bn buyback despite Q4 profit slide — and debt jumps to $45.7bn

CEO Wael Sawan described 2025 as a year of "accelerated momentum," highlighting the company's achievement of $5 billion in cost savings since 2022. However, analysts have expressed concerns about Shell's reserve life, which has decreased to 7.8 years from 8.9 years in 2024. This decline has prompted speculation about the company's mergers and acquisitions strategy to replenish its reserves.

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Looking ahead, Shell has projected capital expenditures between $20 billion and $22 billion for 2026, while also emphasizing its focus on integrated gas and upstream operations, which continue to perform well despite the overall downturn in earnings.

Shell posts weakest quarterly profit in five years, misses Q4 estimates

The results have drawn criticism from various stakeholders. Mark van Baal, founder of the activist shareholder group Follow This, pointed out that Shell's declining profits amid rising global energy demand highlight "weakening fossil fuel economics." Environmental groups have also criticized Shell for prioritizing shareholder payouts over addressing climate change impacts, with Greenpeace stating that the company's profits could significantly contribute to the UK's climate damage costs.

Shell to hand investors bigger payouts despite continued fall in profitsShell misses profit expectations, but keeps buyback paceShell’s quarterly profit falls 11% amid weak oil prices, maintains buyback paceCNBC's UK Exchange newsletter: The pressure’s on Shell to beat once againShell stock slips after profit miss as investors weigh buyback and dividend boostShell posts weakest quarterly profit in five years, misses Q4 estimatesShell stock jumps after Brazil Orca stake sale, with Q4 results next in focus

Following the earnings report, Shell's shares fell approximately 1.9% in early trading, reflecting investor concerns about the company's ability to sustain its buyback and dividend commitments in a challenging market environment.

Shell posts weakest quarterly profit in five years, misses Q4 estimates

Shell's fourth-quarter earnings report underscores the challenges facing the oil and gas sector amid falling prices and increasing scrutiny over environmental responsibilities. While the company continues to prioritize shareholder returns, the sustainability of its financial strategies will be closely monitored as market conditions evolve.

CNBC's UK Exchange newsletter: The pressure’s on Shell to beat once again