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The dispatch
It is just over three years since Wael Sawan succeeded Ben van Beurden as chief executive of Shell.
While there has been much background noise, not least about a possible takeover bid for BP, a less remarked-uponaspect of Sawan’s time at the helm to date is just how often the oil major has beaten expectations on results day.
Infive ofthe last eight quarters, Shell has reportedbetter-than-expectedearnings, most strikingly when, at the end of October last year, itreported third-quarter earnings of $5.4 billion—comfortably ahead of the $5.1billion that even the most bullish analysts had forecast.
That may reflect nothing more than skilled expectations management.
However, for a business as widely-followed in the market as Shell, beating expectations—particularly tothisextent—takes some doing.
And, given the precipitousyear-on-yeardrop in the oil price, it highlights that Sawan has sharpened Shell’s operational performance to an extent perhaps underappreciated by the market.
A Shell petrol station in London, U.K., on Wednesday, Jan. 7, 2026.
Chris Ratcliffe | Bloomberg | Getty Images
All of which should be borne in mind when, tomorrow,Shell reports results for the fourth quarter of 2025 and for the year as a whole.
WithBrent crudefalling almost 19% over 2025,andat one point last month,slipping below $60 a barrel for the first time in nearly five years, headline earnings for 2025 are likely to be down by around a fifth on the previous 12 months.
For the fourth quarter, theyare expectedtobe down by around 10% year-on-year;Shellindicated in last month’s trading update that earnings in its downstream division will be lower, its chemicals arm will report “a significant loss” and that the outcome for its energy trading business “is expected to be significantly lower” than in the third quarter.
That said, Shell’s upstream business continues to offer cheer,withthe companysayinglast month that production for the quarter will come in at between 1.84-1.94 million barrels of oil equivalent per day, compared with 1.832million in the previous quarter. Liquified natural gas volumes should also be slightly ahead of the third quarter.
Capital returns concerns
Those modest improvements, though, have not dispelled concerns about the sustainability of Shell’s capital returnsprogram.
At each of the last two quarterly trading updates, it has announced plans to buy back $3.5billion worth of its shares, the latest of which marked the 16th consecutive quarter in which Shell had announced $3 billion or more in buybacks.
It is a performance that has marked out Shell as a best-in-class performer when it comes to capital discipline. Of its peers, only Exxon Mobil has maintained the level of its buybacks despite the decline in crude prices, with the likes of BP and Chevron reducing the pace of their buybacks last year in response to market conditions. So this will be closely watched tomorrow.
Shell’s ability to keep up this pace of buybacks will in turn be affected by the extent to which it has maintained control of costs.
At its capital markets day, at the end of March last year, Shell raised its cost reduction target from between $2-3billion by the end of 2025 to a cumulative $5-7billion by the end of 2028. It also cut its capital expenditure target, previously set at £22-25billion a year in June 2023, to $20-22billion between 2025 and 2028.
It would be startling indeed were the company to fall short of these targets, so soon after having set them, which is another reason to feel relatively optimistic on the prospect for buybacks.
As interesting will be what Sawan says about where Shell is deploying capital. Reuters reported last month the company maysell its Vaca Muerta shale oil and gas assets in Argentina’s Neuquen basin, where production costs are higher than comparable U.S. assets, potentially raising several billion dollars. Such a move would be in keeping with Sawan’s gradual reshaping of Shell’s portfolio which has also seen it divest assets such as an LNG project in Argentina and, as has been well documented, some renewables projects.
One part of the world where Shell is notably more enthusiastic, though, is Nigeria. Sawan was in the country two weeks ago and met the president, Bola Tinubu, at the latter’s official residence in Abuja.
There, he highlighted Shell’s recent investments in the country, including $5billion in the Bonga North deepwater project 120 kilometres off the Nigerian coast and $2billion in the HI [CORR] gas field. He indicated that Shell and its partners were also advancing plans for the nearby Bonga Southwest project, which could see up to $20billion deployed in what would be one of the world’s biggest energy projects.
This newfound enthusiasm marks a significant change from Shell’s recent sentiment towards Nigeria over the last decade or so.
BP chatter
One topic Sawan will be keen to avoid is BP.Shell officially ruled out a moveon its smaller rival in June last year that, under U.K. takeover rules, prevented it from making an offer for the next six months. That period ended on Boxing Day,but Shell’s thinking is unlikely to have changed—not least because BP’s share price has rallied by 25% since Shell ruled out an offer. The Financial Times reported seven weeks ago that Greg Gut, Shell’s former head of mergers and acquisitions and the key proponent of a BP takeover, hadleft the company prior to the no-bid announcement.
A question that may be harder to ignore is whether Shell is contemplating moving its main stock listing to New York. Despite delivering a superior financial performance to Chevron over the last two years, Shell has been unable to close the gap in stock market valuation to its U.S. rival, something that must surely irk the intensely competitive Sawan.
It would not be a surprise were this eventually to come to pass—delivering a huge blow to the City of London’s prestige in the process.
Top TV picks on CNBC
Astrid Nordin, Lau Chair of Chinese international relations at King’s College London, says recent visits by Western leaders to China are a boost for the country, as it signals the importance of Beijing in the global economy despite threats of retaliation from U.S. President Donald Trump.
Deborah Elms, head of trade policy at the Hinrich Foundation, says it’s businesses and governments that will likely collaborate via bilateral “mini arrangements” in 2026.
Need to know
Britain and China rush to forge business deals, as a diplomatic thaw takes hold after Prime Minister Keir Starmer’s visit to China. While no sweeping free trade deal was reached, companies across several industries have announced major investments and partnerships aimed at deepening the commercial ties.
‘Very dangerous’ for the UK to do business with China, Trump warns. His comments on Thursday followed Starmer’s 4-day visit to China last week, the first trip by a British prime minister in eight years. After years of strained relations, China and the U.K. are looking todevelop a long-term strategic partnership.
Is ‘America First’ starting to backfire as Washington’s allies go it alone? Nations and power blocs are forging ties, sidelining a more hostile U.S. They include China’s “preliminary agreement” with Canada andrapprochement with the U.K., as well as the EU’s agreements withIndiaandSouth American countries.
— Holly Ellyatt
Quote of the week
The U.S. is looking increasingly like an unstable and unreliable partner. I think it was always imperative for the U.K. to have good relations with China in many people’s minds, but this is now looking even more so given the volatility.
— Professor Astrid Nordin, Lau Chair of Chinese International Relations, King’s College London
In the markets
The FTSE 100 moved higher over the past week, reaching 10,314.59 on Tuesday, up from 10,154.43 last Wednesday. However, Britain’s blue-chip share index closed Tuesday’s session down 0.26%.
The pound, meanwhile, fell against the dollar, with sterling trading at $1.3697 against the greenback on Tuesday, down from $1.3805 a week ago.
Yields on the U.K. government’s benchmark 10-year bonds — also known as gilts — fell slightly to 4.512% from 4.539% last week.
The performance of the Financial Times Stock Exchange 100 Index over the past year.
— Hugh Leask
Coming up
Feb. 5: Bank of England rate decision
Feb. 6: Halifax house price index for January
Feb. 10: BRC retail sales data for January
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