Shell has announced the launch of a $3.5bn (£2.8bn) share buyback scheme, after the oil and gas giant reported better than expected profits in the first three months of 2024.

The British firm reported adjusted earnings of $7.7bn (£6.1bn) in the first quarter of the year, which is a 6% increase quarter-on-quarter.

Although this was a drop from $9.6bn (£7.7bn) a year previously, the figure beat the predicted $6.5bn (£5.2bn) set by analysts.

The share buyback has been launched on the back of a previous $3.5bn share buyback, which was completed in Q4 2023.

Head of equity research at Hargreaves Lansdown, Derren Nathan, said: "Shell’s produced yet another quarter of staggering cash flows. Higher margins and up time at its refineries more than offset lower earnings in the upstream and integrated gas divisions. The strong cash generation is enabling Shell to reduce debt, reward shareholders (it’s also raised the dividend 20% year-on-year) and continue investing into the business as it targets total expenditure of $22-$25bn (£17.6bn-£20bn) in both 2024 and 2025.

"There’s no doubting Shell’s relentless focus on shareholder value and over the long-term the sub 10 times earnings multiple doesn’t look too demanding. Price volatility is an ever-present risk across the sector but it’s one that Shell is navigating admirably."

The share buyback comes as the group prepares to face a shareholder battle over its climate agenda, which is set to take place at its annual general meeting later this month.

According to The Guardian, the firm has been accused of underestimating its green ambitions in a way to boost its valuation by growing its liquified natural gas business and holding its oil production rates steady for the rest of the decade.

However, there were fears last month that the oil and gas giant could leave the London Stock Exchange and move to a New York listing, as US investors looked more favourably upon fossil fuels.

Investment director at AJ Bell, Russ Mould, said: "The relatively muted market reaction to Shell’s better-than-expected earnings and unveiling of a $3.5bn share buyback may fuel the argument it would be better served by listing in the US.

"However, this would be something of a red herring with enthusiasm for Shell likely tempered thanks to pressure on oil prices from strong US inventories.

"It is notable the company, a leader in the natural gas market, achieved its stronger-than-anticipated quarterly showing despite facing an obvious impact from lower gas prices."

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