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

Core Viewpoint - Shell has demonstrated strong operational performance under CEO Wael Sawan, consistently beating market expectations despite a significant drop in oil prices [1][2]. Financial Performance - Shell reported better-than-expected earnings in five of the last eight quarters, with a notable third-quarter earnings of $5.4 billion, surpassing the forecast of $5.1 billion [2]. - The company anticipates a year-on-year decline in headline earnings for 2025 by around 20%, attributed to a nearly 19% drop in Brent crude prices [4]. - For the fourth quarter, earnings are expected to decrease by approximately 10% year-on-year, with lower performance in downstream and chemicals divisions [5]. Production and Capital Returns - Shell's upstream business remains robust, with production expected between 1.84-1.94 million barrels of oil equivalent per day, an increase from 1.832 million in the previous quarter [6]. - The company has announced plans for $3.5 billion in share buybacks for the last two quarters, marking the 16th consecutive quarter of buybacks exceeding $3 billion [7][8]. Cost Management and Capital Deployment - Shell has raised its cost reduction target to a cumulative $5-7 billion by the end of 2028 and reduced its capital expenditure target to $20-22 billion between 2025 and 2028 [9]. - The company is considering selling its Vaca Muerta shale assets in Argentina, which could generate several billion dollars, aligning with Sawan's strategy to reshape Shell's portfolio [11]. Regional Focus and Investments - Shell is increasing its investments in Nigeria, with $5 billion allocated to the Bonga North deepwater project and $2 billion to the HI gas field, alongside plans for the Bonga Southwest project potentially involving up to $20 billion [13][14]. Strategic Considerations - Shell has ruled out a takeover bid for BP, which has seen a 25% increase in share price since the announcement [15]. - There are speculations about Shell potentially moving its main stock listing to New York to improve its market valuation compared to U.S. rivals [16].