Shell Launches $3.5 Billion Buyback After Earnings Beat Forecasts — Update

By Christian Moess Laursen

Shell's first-quarter adjusted earnings fell by less than expected, buoyed by strong margins from crude and oil trading, while the energy giant kicked off a $3.5 billion share buyback program as it hurries to close the valuation gap to U.S. rivals.

The British energy major on Thursday reported adjusted earnings of $7.73 billion for the quarter, down from $9.65 billion in the same quarter a year ago, but ahead of market expectations provided by Vara Research of $6.46 billion.

The London-based company said the trading gains were driven by lower operating expenses, increased margins from crude and oil products and on refining, offsetting lower liquefied natural gas trading.

Shell continues to reward shareholders, with a $3.5-billion share buyback program set to complete by the release of its second-quarter results, after completing a similar buyback program following fourth-quarter results.

In addition, Shell declared raised its dividend payout to 34.40 cents a share from 28.75 cents in the prior quarter, taking total shareholder returns to $5.0 billion.

Shell's first-quarter profit on a current cost of supplies basis--a figure similar to the net income that U.S. oil companies report--was $7.16 billion, down from $9.26 billion in the fourth quarter.

Cash flow from operations--a measure of cash a company generates from normal business operations--was $13.33 billion, beating market forecasts of $13.19 billion.

Write to Christian Moess Laursen at christian.moess@wsj.com