Shell plc (SHEL)

Shell plc is a global group of energy and petrochemical companies operating across more than 70 countries with approximately 85,000 employees ¹. The company's activities include oil and gas exploration and production, and the marketing of fuels, lubricants and chemical products, as well as low-carbon energy products and solutions. Shell provides energy, directly or indirectly, to around a billion people every year. The industry is characterized by intense competition amplified by the energy transition, with Shell facing competition in all its businesses from both private-sector peers and state-owned hydrocarbon entities that may not require competitive returns. Key structural forces shaping competition include fluctuating commodity prices, geopolitical instability, the pace of the energy transition, and evolving regulatory landscapes across different jurisdictions.

Shell is the world's leading publicly listed supplier of LNG with a worldwide network of customers, extensive shipping and storage assets, and access to regasification plants. The company's Integrated Gas portfolio is the largest among peers, servicing nearly a fifth of global LNG demand. Shell is also the world's number one finished lubricants supplier and a leader in mobility with a first-class customer-centric network. The company's competitive advantages include almost five decades of deep-water expertise, a globally diversified portfolio of LNG plants and terminals that enhances resilience to market shocks, and an integrated business model that combines energy production with being one of the world's largest and most experienced energy traders and suppliers. Primary competitors are not individually named in the filing beyond references to state-owned entities and other major oil and gas companies.

Shell generates revenue through an integrated value chain spanning oil and gas exploration and production, LNG liquefaction and trading, refining, chemicals manufacturing, and the marketing of fuels, lubricants and chemical products. The company also offers low-carbon energy products and solutions including renewable power generation, hydrogen, carbon capture and storage, and biofuels. Revenue is a mix of transactional income from commodity sales and recurring income from long-term contracts, particularly in LNG where term sales contracts exist for most liquefaction volumes. Primary customer segments include commercial and industrial customers, retail consumers served at millions of daily transactions across the retail network, and wholesale customers in aviation, marine, and agriculture sectors. Trading and optimisation sits at the heart of Shell's integrated model, enabling the company to capture opportunities from market volatility while providing secure energy to customers across the world.

The Integrated Gas segment includes natural gas and liquids exploration and extraction, with the gas then processed to produce LNG or converted into GTL fuels and other products. This segment also includes the marketing, trading and optimisation of LNG. In 2025, Integrated Gas reported income for the period of $8,820 million ² and Adjusted Earnings of $8,024 million ³. LNG liquefaction volumes were 28.4 million tonnes ⁴ and LNG sales volumes reached 72.9 million tonnes ⁵, an 11% increase from the prior year supported by the highest number of cargoes delivered in a single year and the acquisition of Pavilion Energy. The Upstream segment explores for and extracts crude oil, natural gas and natural gas liquids, and also markets and transports oil, gas and liquids. Upstream reported income for the period of $9,443 million ⁶ and Adjusted Earnings of $7,442 million ⁷ in 2025. Total production available for sale was 2,800 thousand boe/d ⁸, with liquids production sustained at approximately 1.4 million barrels per day.

The Marketing segment includes Mobility, Lubricants, and Sectors and Decarbonisation. Mobility operates the retail network including electric vehicle charging and convenience retail, while Lubricants produces, markets and sells products for road transport and machinery. The Chemicals and Products segment includes chemicals manufacturing plants and refineries which turn crude oil and other feedstocks into a range of oil products, and also includes the pipeline business and trading and optimisation of crude oil, oil products and petrochemicals. The Renewables and Energy Solutions segment encompasses renewable power generation, marketing, trading and optimisation of power and pipeline gas, hydrogen production, commercial CCS hubs and carbon credits. As of 2025, approximately $20 billion ⁹ of Shell's capital employed related to lower-carbon platforms including power, low-carbon fuels, hydrogen, and carbon capture and storage.

In 2025, Shell completed several significant operational developments. The company completed the acquisition of 100% of the shares in Pavilion Energy Pte. Ltd. in March 2025. The first cargo of LNG left the LNG Canada joint venture facility in June 2025, with Shell holding a 40% interest. Final investment decisions were taken on the Mina West gas discovery in Egypt (Shell interest 60%), the Aphrodite development project in Trinidad and Tobago (Shell interest 100%), and the Gorgon Stage 3 development in Australia (Shell interest 25%). In Upstream, Shell completed the sale of The Shell Petroleum Development Company of Nigeria Limited to Renaissance in March 2025, and in December 2025 completed the formation of the Adura Energy Limited joint venture with Equinor ASA, combining UK offshore oil and gas operations into a 50:50 joint venture. Shell also completed the divestment of its Energy and Chemicals Park in Singapore and stopped construction of its planned biofuels plant in Rotterdam. Share buybacks of $13.9 billion ¹⁰ were executed during 2025, with 396.4 million ¹¹ ordinary shares purchased and cancelled at an average price of $35.01 ¹² per share.

Income attributable to Shell plc shareholders in 2025 was $17,837 million ¹³, compared with $16,094 million ¹⁴ in 2024. Income for the period was $18,119 million ¹⁵, compared with $16,521 million ¹⁶ in 2024. Adjusted Earnings were $18,528 million ¹⁷, compared with $23,716 million ¹⁸ in 2024, with the decrease mainly driven by lower realised liquids and LNG prices, lower trading and optimisation, and lower Chemicals margins, partly offset by higher volumes, lower operating expenses, favourable tax movements and higher Marketing margins. Cash flow from operating activities was $42,863 million ¹⁹, compared with $54,687 million ²⁰ in 2024. Free cash flow was $26,052 million ²¹, compared with $39,533 million ²² in 2024. Basic earnings per share were $3.03 ²³, compared with $2.55 ²⁴ in 2024. The company returned $8.5 billion ²⁵ to shareholders through dividends and $13.9 billion ²⁶ through share buybacks in 2025, representing 52% ²⁷ of cash flow from operating activities.

The company's financial framework targets are stated in terms of growth rates and ranges rather than point estimates for the next fiscal year.

Shell's primary growth vector is growing its integrated gas and LNG business, targeting LNG sales growth of 4-5% per year on a compound annual growth rate basis through to 2030 ²⁸. The company believes that supplying LNG will be the biggest contribution it will make to the energy transition over the next decade. In 2025, LNG sales volumes increased by 11% to 72.9 million tonnes ²⁹, supported by the acquisition of Pavilion Energy and the first cargoes from LNG Canada. The company has a 40-year export licence for LNG Canada and holds interests in multiple LNG liquefaction plants under construction, including Nigeria Train 7, QatarEnergy LNG NFE(2), QatarEnergy LNG NFS(2), and Ruwais LNG, with first LNG expected from these projects in the second half of the 2020s and 2028 respectively. Shell's 2025 LNG Outlook forecasts global demand for LNG to rise by around 60% by 2040, largely driven by economic growth in Asia.

A second major growth vector is keeping liquids production stable while growing total production. Shell aims to sustain liquids production at 1.4 million barrels per day ³⁰ while growing total production across combined Upstream and Integrated Gas by 1% per year through to 2030 ³¹. The company plans to deliver new projects with more than 1 million barrels of oil equivalent a day by 2030, and has already added a quarter of that production to its portfolio. In 2025, Shell achieved its highest-ever quarterly production in Brazil and its highest quarterly production since 2005 in the Gulf of America. Key projects contributing to this growth include the Whale floating production facility in the Gulf of America, which reached nameplate capacity in less than half the expected time, the Mero-4 FPSO in Brazil which started production in May 2025, and the Orca project (formerly Gato do Mato) in Brazil which is expected to begin operations in 2029 with peak production of up to 120,000 b/d ³².

Shell is targeting structural cost reductions of $5-7 billion in cumulative savings by the end of 2028 compared with 2022 ³³. By the end of 2025, the company had already achieved structural cost reductions of $5.1 billion ³⁴ since 2022, with nearly 60% of these reductions coming from operational efficiencies, a leaner corporate centre and faster value-based decision-making. The company is targeting 40-50% of cash flow from operating activities through the cycle for shareholder distributions ³⁵. Underlying operating expenses were $35,032 million ³⁶ in 2025, compared with $35,707 million ³⁷ in 2024, with decreases mainly driven by structural cost reductions delivered through portfolio changes, operational efficiencies, a leaner corporate centre and faster value-based decision-making.

Shell plans cash capital expenditure within the range of $20-22 billion per year between 2025 and 2028 ³⁸, with $21 billion ³⁹ in 2025. Cash capital expenditure in 2025 was $20,915 million ⁴⁰, compared with $21,085 million ⁴¹ in 2024. The company expects cash capital expenditure of around $6 billion ⁴² in 2026 in Integrated Gas and around $7 billion ⁴³ in 2026 in Upstream. Shell is targeting to grow normalised free cash flow per share by more than 10% on average per year through to 2030 ⁴⁴. The company maintains a strong investment grade balance sheet, with gearing at 20.7% ⁴⁵ at December 31, 2025, compared with 17.7% ⁴⁶ at December 31, 2024. Net debt was $45,687 million ⁴⁷ at December 31, 2025, compared with $38,809 million ⁴⁸ at December 31, 2024.

Shell's capital allocation framework prioritises shareholder distributions, with total distributions enhanced to 40-50% of cash flow from operating activities through the cycle ⁴⁹, continuing to prioritise share buybacks while maintaining the 4% per year progressive dividend policy ⁵⁰. The fourth quarter 2025 dividend of $0.372 ⁵¹ per ordinary share represents an increase of 4% compared with the third quarter 2025 dividend. In 2025, share buybacks of $3.5 billion ⁵² were announced on January 30, $3.5 billion ⁵³ on May 2, $3.5 billion ⁵⁴ on July 31, and $3.5 billion ⁵⁵ on October 30. On February 5, 2026, a further buyback of $3.5 billion ⁵⁶ was announced. The company spent almost $500 million ⁵⁷ on research and development projects that aim to contribute to decarbonisation, representing about 41% ⁵⁸ of total research and development expenditure.

Shell faces structural headwinds from the energy transition, with climate change and the energy transition posing multiple risks including declines in demand for and prices of the company's products, commercial risks from growing the low-carbon business, and adverse litigation and regulatory developments. The company's annual carbon cost exposure is expected to rise as carbon pricing expands globally and average prices increase. Shell also faces headwinds from geopolitical instability, with ongoing conflicts in the Middle East and the Russia-Ukraine war creating uncertainty. The company noted that the broader consequences of the ongoing conflicts and tensions in the Middle East remain uncertain and could negatively impact operations in the region and beyond. Additionally, the company faces risks from trade policy uncertainty, with the USA raising the average effective import tariff from just below 2% at the end of 2024 to around 15% at the end of 2025 ⁵⁹, triggering trade policy uncertainty.

Shell identified several execution risks to its growth plan. The company's ability to deliver capital projects and sustain future production is subject to risks including uncertain geology, deep drilling conditions, supply chain constraints, the lack of available skilled labour and technology, the absence of transport infrastructure, permitting delays and cost overruns. These risks are compounded by geopolitical instability, inflationary pressures and evolving legal and regulatory landscapes. The company also faces risks related to joint arrangements, where partners may be unable to meet their financial or other obligations for projects or operations. In the low-carbon space, Shell noted that if it moves much faster than society, it risks investing in technologies, markets or low-carbon products for which there may be insufficient demand, while if it is slower than society, customers may prefer a different supplier.

Management's message emphasizes a focus on performance, discipline and simplification across Shell, which has translated into stronger operational performance, greater discipline in capital allocation, and more clarity about where the company creates value. The Chief Executive Officer stated that Shell delivered on the financial targets set out at Capital Markets Day 2023 and set more ambitious financial targets at Capital Markets Day 2025, including reaching $5.1 billion ⁶⁹ in structural cost reductions by the end of 2025 compared with 2022, three years ahead of target. Management highlighted that in the three years to the end of 2025, Shell has outperformed its peers in terms of total shareholder return. The strategic priorities emphasized for the period ahead are: growing the integrated gas and LNG business with LNG sales growth of 4-5% per year through to 2030 ⁷⁰; keeping liquids production stable at 1.4 million barrels per day ⁷¹ while growing total production by 1% through to 2030 ⁷²; and transforming Downstream, Renewables and Energy Solutions to drive cash flow resilience and higher returns through disciplined capital allocation. Management also emphasized the target to grow normalised free cash flow per share by more than 10% on average per year through to 2030 ⁷³ and the commitment to shareholder distributions of 40-50% of cash flow from operating activities through the cycle ⁷⁴.

Total revenues for 2025 were not explicitly stated as a single line item in the provided filing excerpts, but income attributable to Shell plc shareholders was $17,837 million ⁷⁵ compared with $16,094 million ⁷⁶ in 2024. Income for the period was $18,119 million ⁷⁷ compared with $16,521 million ⁷⁸ in 2024. Basic earnings per share were $3.03 ⁷⁹ compared with $2.55 ⁸⁰ in 2024, and Adjusted Earnings per share were $3.15 ⁸¹ compared with $3.76 ⁸² in 2024. Adjusted Earnings were $18,528 million ⁸³ compared with $23,716 million ⁸⁴ in 2024. Adjusted EBITDA was $56,135 million ⁸⁵ compared with $65,803 million ⁸⁶ in 2024. Cash flow from operating activities was $42,863 million ⁸⁷ compared with $54,687 million ⁸⁸ in 2024. Free cash flow was $26,052 million ⁸⁹ compared with $39,533 million ⁹⁰ in 2024. Return on average capital employed on an Adjusted Earnings plus non-controlling interest basis was 9.4% ⁹¹ compared with 11.3% ⁹² in 2024. Net debt was $45,687 million ⁹³ at December 31, 2025, compared with $38,809 million ⁹⁴ at December 31, 2024. Gearing was 20.7% ⁹⁵ at December 31, 2025, compared with 17.7% ⁹⁶ at December 31, 2024. Identified items in 2025 amounted to a net loss of $53 million ⁹⁷ and included impairment charges, gains on disposal of assets mainly related to the incorporation of the Adura Energy Limited joint venture, and favourable movements due to the fair value accounting of commodity derivatives. This compares with identified items in 2024 which amounted to a net loss of $7,364 million ⁹⁸ and included net impairment charges and reversals, reclassifications from equity to profit and loss of cumulative currency translation differences, unfavourable movements relating to the fair value accounting of commodity derivatives, and charges related to redundancy and restructuring. By segment, Integrated Gas reported Adjusted Earnings of $8,024 million ⁹⁹, Upstream reported $7,442 million ¹⁰⁰, Marketing reported an income for the period of $2,088 million ¹⁰¹, Chemicals and Products reported an income for the period of $1,083 million ¹⁰², and Renewables and Energy Solutions reported an income for the period of $1,015 million ¹⁰³.

Shell faces material risks from climate change and the energy transition, including potential declines in demand for oil and gas products, commercial risks from growing the low-carbon business, and adverse litigation and regulatory developments. The company's annual carbon cost exposure is expected to rise as carbon pricing expands globally, with carbon costs in Europe forecast at $80-120 per tonne ⁶⁰ for 2025-2028 and in the UK at $100-150 per tonne ⁶¹ for the same period. The company faces litigation risk from climate change lawsuits, including an appeal filed by Milieudefensie with the Dutch Supreme Court against the Court of Appeal judgment that overturned a lower court finding that Shell had an obligation to reduce certain aggregate annual volumes of CO2 emissions by 2030. Shell also faces significant portfolio risks from fluctuating commodity prices, with Brent crude oil averaging $69.1 per barrel ⁶² in 2025 compared with $80.8 per barrel ⁶³ in 2024, a decline that directly impacts revenue from Integrated Gas and Upstream businesses. The company's proved oil and gas reserves decreased by 1,497 million boe ⁶⁴ in 2025 to 8,123 million boe ⁶⁵ at December 31, 2025, driven by acquisitions and divestments including the swap transaction involving synthetic crude oil reserves in Canada and the divestment of SPDC in Nigeria. Health, safety, security and environment risks are material given the nature of operations, with four fatalities ⁶⁶ in Shell-operated businesses in 2025 and a fatality and permanent impairment frequency of 2.1 ⁶⁷ per 100 million working hours, compared with 1.7 ⁶⁸ in 2024.