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Shell’s Profit Falls on Lower Crude Prices, Chemicals Drag
Goal to Close a Large Valuation Gap With Exxon, Chevron Has Become Harder This Year
Shell Plc profits slumped in the fourth quarter, undershooting expectations as lower crude prices and a struggling chemicals business dented earnings.
Europe’s largest oil company took on more debt, while maintaining its quarterly share buyback of $3.5 billion and raising its dividend even as volatile oil prices pressure its plan to boost investor returnsthrough 2030.
Investors are increasingly focused on Shell’s growth outlook after CEO Wael Sawan cut costs and shed underperforming assets. His goal to close a large valuation gap with Exxon Mobil Corp. and Chevron Corp. has become harder this year after the shares of the U.S. rivals soared, buoyed by strong production from low-cost oil fields in Guyana, the Permian Basin and Kazakhstan.
Shell shares fell as much as 2.5% in London, outpacing declines of peers BP Plc and TotalEnergies SE.
Shell’s stock was the best performer among the world’s top five oil majors in dollar terms last year, but since mid-November the gains have fizzled and so far in 2026 it’s been lagging its peers. Still, it has outperformed rivals during Sawan’s three-year tenure.
Shell’s adjusted net income of $3.26 billion for the quarter was down 11% from a year earlier and lower than the average analyst estimate of $3.51 billion. A slight production rise — in line with expectations — was unable to lift earnings.
2025 was a year of accelerated momentum, with strong operational and financial performance across Shell. — Shell (@Shell)
Gearing — the ratio of net debt to equity — rose, challenging the firm’s ability to organically stick with its level of share repurchases through this year. The measure climbed to 20.7% in 2025, from 17.7% the previous year.
The London-based company’s 2% year-on-year production growth in the quarter pales in comparison to that of the Americans. Chevron increased output by 20% in the fourth quarter from a year earlier, thanks to volumes from its Kazakhstan project and integration of the Hess Corp. portfolio. Exxon expanded production by 15% driven by output in the Permian, as well as from its massive Guyana project.
Brazil and the Gulf of Mexico are key to Shell’s production, as well as its new U.K. North Sea joint venture with Equinor ASA. But investors are less excited about these plays than those of Exxon and Chevron.
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Elsewhere in the world, Shell is seeking to find commercial pathways for its Namibia oil discoveries and has re-entered Libya fossil fuel development. The company is also interested in investment opportunities in Venezuela, particularly advancing its natural gas project called Dragon in Caribbean waters near the Trinidad maritime border, Chief Financial Officer Sinead Gorman told journalists Feb. 5.
“We note that Shell’s reserve life is now 7.8 years (from 8.9 last year), impacted by the sales in Nigeria and the remaining oil sands position,” RBC analyst Biraj Borkhataria said in a note Feb. 5. “Given this is weaker than some peers, we anticipate this could fuel more questions around Shell’s M&A reserve replacement strategy.”
Acquisitions have largely filled the company’s production gap through 2030, buying time to deal with the 2030-2035 period, Sawan said in an interview with Bloomberg TV.
Oil prices tumbled 18% in 2025 as rising production in and outside the OPEC+ alliance led to widespread expectations of a glut forming this year. Benchmark Brent futures have recovered some of the losses so far in 2026, trading around $68 a barrel, as U.S.-Iran tensions add a geopolitical risk premium to prices. But they remain well below the 2025 highs above $80.
Shell’s profit miss comes after analysts revised down their forecasts, following a company update in January that warned its oil trading performance in the quarter had been “significantly lower” than in the previous and that the troubled chemicals division lost money.
“The declining profits expose weakening fossil fuel economics,” Shell activist investor Follow This founder Mark van Baal said in a statement Feb. 5. “Yet the company has no plan to create shareholder value.”
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Shell’s 2026 capital spending plan remains $20 billion to $22 billion, after the company’s 2025 expenditures came in within that range. Sawan and Gorman have been reining in Shell’s spending during their three years at the helm, with structural cost reductions continuing.
The U.K. company is interested in trading opportunities in Venezuela, Gorman also said.
Losses in the chemicals division were significant enough to offset stronger refining margins, which were a boost for Exxon when the Texas giant reported results late last month.
The chemicals business has been a drag on earnings Sawan has pledged to address, but he has cautioned it could be a long process.
